Many consumers still do not understand fundamental insurance concepts
By Robin Gelburd
In the ongoing effort to contain healthcare costs, many employers have begun moving employees to consumer directed health plans (CDHPs). These plans aim to make consumers more aware of the cost of their care by exposing them to the financial implications of treatment decisions.
While the provisions of CDHPs can vary, most include a high deductible and a personal savings account to cover expenses incurred before an employee meets that deductible. Enrollment in CDHPs has grown tremendously in recent years, and these plans now cover about 20% of people with employer-sponsored insurance.
While the growth in CDHPs is well documented, we are still studying the implications of this shift on consumers’ healthcare expenses and care decisions. It is a challenge to promote effective use of CDHPs when many consumers still do not understand fundamental insurance concepts and how those concepts apply to their CDHP.
For example, one study found that among employees enrolled in a health plan with a deductible, only 52% knew that they had the deductible. Among these individuals, 35% knew the amount of the deductible; 5% correctly identified all of the services applicable to it; and 2% knew both. Studies like these demonstrate that employees need a great deal of education and assistance in understanding CDHPs both before they enroll in this type of plan and after they begin using their benefits.
Employees enrolled in CDHPs also need reliable, independent cost information and education on how to apply that information to healthcare decisions. Price transparency tools are now available from a variety of sources. Recent reports such as those released by the HFMA Price Transparency Task Force offer a range of variables upon which to evaluate a given tool. These variables include the ability of an employee to understand the full cost of their care as well as their own out-of-pocket costs; assistance with finding lower cost options and/or avoiding unnecessary care; and the availability of quality data.
Another important factor to consider when developing or evaluating a tool is the data source that underlies it. Tools that are based on one plan or one employer’s data are useful for employees going in-network; large, independent sources of claims data are key to supporting employee decisions regarding out-of-network care or whether to seek a service that is not covered by a given CDHP.
As the healthcare industry asks consumers to be more aware of costs, we must hold up our end of the bargain by continuing to understand consumers’ decision support needs and developing tools that meet those needs. It is largely this development that will determine whether CDHPs make a meaningful contribution to reducing our nation’s healthcare expenses or become a disappointing attempt to reform our reimbursement system.
Robin Gelburd is the president of FAIR Health, Inc.