I can't remember a time when so many Americans had an opinion about the healthcare system. For as long as I can remember, American workers have come to expect healthcare services as part of their employer-sponsored benefit plans. While this continues to be the prevailing model, employer-defined benefits actually challenge the expected goals of The Health and Human Service Triple Aim (which is improving health care quality, improving population health, and reducing unnecessary healthcare costs) and challenge the notion of "consumerism" because they do nothing to foster competition, improve quality or decrease costs.
Health Savings Accounts, introduced nearly 20 years ago, in conjunction with high-deductible plans, were supposed to lower healthcare costs by shifting some of the financial burden to individuals. While enrollment in these models has increased, they simply have not done enough to bend the cost curve as evidenced by the following statistics in a recent Modern Healthcare Report:
- Healthcare spending per person has grown cumulatively by 15% over the entire study period of 2012 to 2016
- Per person spending on outpatient services reached $1,507 in 2016, an increase of 6.2% over 2015
- Per person spending on prescription drugs totaled $1,030, up 5.1%
In addition, a 2017 Bloomberg News National Poll shows that consumers are beginning to question the "value" of healthcare services and products. According to this report, consumers viewed health insurance companies more unfavorably than some other key U.S. institutions which are drawing the ire of Americans; yikes!
Net Unfavorable Consumer Ratings (%):
- Health Insurance Companies – 61%
- Congress – 60%
- Wall Street Banks 52%
- White House – 48%
Moving from fee-for-service payment to value-based reimbursement models helps to improve the value of and satisfaction with care delivery, but has resulted in misalignment with how insurance products are structured and delivered. Since providers are being incentivized to structure care delivery around patients' health needs, then why aren't insurance products structured in the same way? Why not structure insurance coverage around episodes similar to how integrated care delivery emphasizes transitions of care and incentives based on solving a particular episode of illness? What if patients didn't have to worry about paying multiple copays or try and figure out what is and isn't covered? What if insurance coverage was packaged around episodes similar to how care delivery models are evolving?
Most Americans simply don't understand how our complex healthcare works until they are denied coverage. Healthcare payers have an opportunity to re-design their products with the customer in mind, and they will need to do so as the market continues its move towards consumerism. Just as employers moved financial incentives from pensions to 401(k) plans, they will do the same for healthcare benefits. Just as with other industries, Gen Y and Millennials will serve as the tipping point to change how healthcare products and services are packaged and sold. A 2017 report titled, The Shifting Healthcare Market: From Defined Benefit to Defined Contribution Health Benefits "estimated that up to 70% of Gen Y employees prefer alternatives to traditional group health insurance.”
Payers must get ahead of this trend and design their insurance products with consumers in mind. At xScion, my team developed The Health Insurance Product Playbook - a product design and marketing framework that can adapt product strategy as quickly as market conditions change and help payers stay ahead of changes in customer preferences, competitive landscape and regulations. The Product Playbook helps to answer the following questions by focusing on shorter timeframes when market intelligence is higher and uncertainty is lower:
- How can we proactively address customer needs in a fast-evolving market place?
- What will the regulatory climate look like in 12-24 months?
- Which products deliver the greatest “value” to our customers?
- How can we improve customer engagement through more effective product design and development, positioning, and delivery?
The Product Playbook addresses both product design & delivery, as well as product positioning. The central idea behind the playbook is to focus on the customer throughout their journey; similar to how integrated care delivery and value-based payment models are being designed.
Care delivery is becoming more patient-centric with clinical processes being designed from the customer perspective, but health insurance products are not being designed in this same way. Payers cannot afford to lose this opportunity to design products per customer needs and to change the unfavorable perception of healthcare insurance companies.
