Employee Health Care: The Employer’s Role (Part One)
Within the past several years, the share of the cost of health care for people and their families has steadily increased. As a result, they now behave like traditional consumers when it comes to health care choices, goals, and expectations. In addition, the increased availability of digital tools has raised expectations about convenience, choice, and transparency in health care.
Employees are looking for accessible, high-quality advice and support in obtaining medically sound, cost-effective, and high-quality health and wellbeing care. In this episode, we chat with engagement strategist Jan Oldendburg, about the nature of the changes driving consumerization in health care. She also discusses how to recognize emerging employee expectations and needs.
Jan Oldenburg, FHIMSS, is the principal in Participatory Health Consulting. She advises and mentors startups and health care organizations regarding the evolving digital health landscape.
Oldenburg has focused on digital transformation in healthcare for more than 20 years. Her experience includes senior roles in several advisory firms as well as digital health leadership roles at Aetna, Kaiser Permanente, and HealthPartners. She’s the former co-chair of the HIMSS Connected Health Committee and a board member of the Society for Participatory Management. Ms. Oldenburg is also a member of the Patient Advocacy & Ethics Group for the Datavant COVID-19 Research Database.
Hello again, welcome back to another episode of For Your Benefits, I’m Meghan Henry, Director of Marketing for SentryHealth, and we are creators of WellOnMyWay, a leading employee health and wellbeing solution. Recently, we hosted a webinar with Jan Oldenberg with Participatory Health Consulting on health care consumers and the employers changing role. The shifts in consumer expectations and behaviors mean that employers need to make changes. Consumers, their employees are seeking advice and support in obtaining medically sound, cost-effective and high-quality health care. During this first episode of this two part series, Jan shares how to understand the nature of the changes driving consumerization of health care and to recognize emerging employee expectations and needs. So without further ado, let’s take a listen.
Taking a Fresh Look at Health and Wellbeing Benefits
What I’m going to talk to you about today, really, is this idea of is it time to take a fresh look at how we think about health care benefits? Based on changes, not just in the consumer health landscape, because honestly, health care moves so slowly that health care is behind in some respects in its response to consumers. But how we are responding to changes in how consumers as a whole think about all of their experiences and what they’re looking for and from the people they interact with?
Whether it’s buying products or consuming entertainment, or thinking about news, our behaviors have changed markedly in the last twenty years, accelerated over the last ten years. And let’s face it, a pandemic has further cemented some of those changes. And those things have a bearing on how they think about both their employers role in relation to their benefits, what they’re looking for from benefits, and how they approach the experience of satisfaction. So we’re going to talk about those things.
Health and Wellbeing Cost Landscape
I want to start by just talking about the landscape in terms of health care costs. So it’s no secret that employer costs for health care have risen over the last two decades, actually. And they continue to be a source of concern regarding the cost of health care and how they can manage that cost and still offer health care but keep their products competitive. So there are a lot of strategies that we’ve seen.
You know, high deductible plans have particularly come into their own in the last 10 years, pairing those plans with health savings accounts to give people a cushion, sponsoring wellbeing programs of a variety of kinds, helping high-cost individuals with specific programs based on their condition or illness. We’ve sen prior authorization and of course care management.
I’m old enough to remember the 1980s, and some of these are strategies that we tried back then, and decided there were better ways and discarded them for a time. But they’ve come back into play as people have gotten more and more concerned about the cost of health care. And it’s not just employers who are concerned about this because the consumer’s share of their cost of health care has been rising over those same 10 years.
This is a graph from Kaiser Health News. And over the last 10 years, the wages have risen by 27%. But family premiums for health care have risen a full 55% and deductibles have risen even faster at 111%. So think about that. Your wages are not keeping up with the cost of your portion of the health care dollar. And a study in 2018 looked at deductibles and premiums and found that the two together exceeded 10% of the median income in 42 states. This also comes in the context of people having a harder time managing their money as a whole.
“Skin in the Game”
So in 2019, the Federal Reserve did a study that showed that consumers, a full 40% of consumers would have trouble handling an unexpected $400 expense. They’d have to borrow from neighbors or friends. They’d have to go into debt for it. So think of that in the context of higher deductibles, which I think the average is now $2500, but it’s going up. When I had an ACA plan, my deductible was $14,500 for two of us. Think about that. That’s untenable for a wide variety of consumers and difficult to fit into your budget no matter who you are.
Now, when we think about it, I’m going to pick a little bit on high deductible plans because I think that they’re one of the markers of some of the things that consumers are struggling with. And their goals were really there were lofty. They really wanted to improve the situation by giving consumers skin in the game and encourage them because they were bearing a bigger share of the cost to behave like the kind of consumers they would behave in any other aspect of their lives, whether it was buying a car, buying a sofa, purchasing a house. They were hoping people would start to do things like ask for cost estimates before they get them. Seventy-five percent of people say having a cost estimate would change their perception of the provider and would make them more likely to pay it. But in fact, it’s still only about 12% of consumers that actually get cost estimates.
They’re hoping people will shop for lower-cost services. Look at what a mammogram costs at the local hospital versus a stand-alone center and pick the one that has a lower cost overall. They’re hoping people will validate the quality and competence before they hire somebody to do their health care job. You know, it’s getting surgery. What are your outcomes? How many of these surgeries do you do annually and asking the provider for that kind of data if they don’t already publish it?
They’re also hoping people will ask for discounts or pay cash in order to get those discounts and also make choices about care that involve paying attention to is this really necessary or is it something that either can wait or I can go to my PCP tomorrow rather than to the E.R. tonight and then at the end of the process, challenge those bills that seem unreasonable, ask questions and challenge them. So that’s the goal. And know I don’t think any of us will disagree that those goals make a lot of sense when you think about how people approach buying health care services.
And this was confirmed by a study in 2019 or 2020 that basically said, I think it was the same Federal Reserve study that I mentioned earlier, a full 25% of consumers put off care because of the cost. And what happens when you introduce a high deductible plan is that your costs actually do go down for health care, at least in the short term. But sometimes it’s a penny-wise and pound-foolish strategy because what consumers actually seem to do is forgo care across the board. They don’t look at their care.
You know, I’m going to say this word of what we’d consider a really rational manner and reduce the less necessary care. And instead, they seem to just kind of reduce it overall. And I’ll provide some more information about that. So that may have the consequence of actually reducing your short-term costs, but driving up your longer term costs. And if you’ve got a workforce that stays with you over any time, that’s obviously not an ideal situation either.
And in 2020, of course, we’ve got only more reasons to delay or defer care because of worries about the coronavirus and the impact of showing up in a place where there are sick people and trying to get care. So we’ve seen some increases in delayed care air and I think it’s resulted in, again, in 2020, short-term lowering of health care costs across the board, but with potentially some long-term consequences that we may be concerned about.
Digital Health and Wellbeing Tools
I will mention here, just by the way, that for somebody like me who has focused on digital health for a very long time and who has a, I’d say, some impatience about the pace of change, it’s great to see that we’ve actually gotten some adaption of digital innovations that have been out there for a while. So far, more providers are offering telehealth services. Far more insurers are covering them during this time period. And along with that, there’s much more attention to, you know, getting access to your portal because that may be your doorway into digital and telehealth tools, making sure that you can get explanations of things through some of those digital tools, because it’s harder to make arrangements to see your provider in person.
So there is actually some good news that came along with that pandemic.
And we are learning that, as I mentioned, consumers don’t always respond in what seems like a rational manner to those reductions or changes in their burden of care. I saw a study that just got published this year that looked at the impact of rising drug prices. So I only looked at one small segment of health care costs and it didn’t cover a very long period of time, but they looked at raising drug prices by 33%. And in that, when they did that, total drug consumption across the board fell by 22%, as monthly mortality actually rose because people were as likely to drop the drugs that were life-saving for their conditions as they were to drop less necessary drugs.
And that may be a part that we don’t do a particularly good job of helping people understand why they’re taking drugs and what they’re doing for them. But the fact is that they don’t always make rational decisions about which prescriptions to fill. And when they have the prescription, whether to take it on schedule or whether to take a portion of it because they’re worried about the costs.
And then there were some other reasons that start to highlight what’s going on here a little bit. They thought it would be too complicated. They didn’t think it would affect their prices or that they’d all be the same anyway. So why bother to check them? I’ll also note that a lot of people who encounter cost estimates tools find that they’re covering larger concerns or don’t cover the specific issue that you’re actually trying to compare.
And so you may even look and feel like, well, I don’t really know if this is the exact procedure they’re going to do. And so it’s hard to tell whether the cost I’m seeing over here is really equivalent to the cost my doctor expects. And that assumes that you’ve even gotten a cost from your provider.
Plus, in this setting of health care, there are other barriers that enter in. It’s hard to make sure that you actually are feeling competent to have that conversation. And people are also embarrassed to ask their doctors about the cost or the physician’s competence. And I think there are a couple of reasons for this. I think they’re embarrassed at the idea that and that it might indicate that they’ve got money problems. They also may be concerned that if they appear to be questioning a doctor’s competence, that they’ll get worse care.
And the same goes for if it feels like they may not be able to afford it, they’re worried that that will affect the care that they receive in the options that they’re offered as well. And they don’t really quite know how to navigate the territory of what the provider charges, what their insurance may pay for any conflicts between those two things. It’s a confusing setting. And even if they do ask their doctor, there actually are an amazing number of doctors who are not comfortable with that conversation either.
Barriers to Health Care Cost Conversations
When I worked at Kaiser Permanente, I was responsible for the project and introduced the first cost transparency tool for consumers and initially medical group leadership said, “OK, that’s all right if we have to figure this out for consumers. But for God’s sake, the doctors don’t need to know about this. So don’t give them access to this tool.” Well, within three weeks of releasing it, the doctors were coming to their leadership and saying, “Hey, we we need to see this tool. It’s embarrassing. People are walking into our offices with cost estimates that we, Kaiser, provided and we have no idea what they’re seeing or what premises they’re made on. We can’t actually advise them. You’ve got to give access to us to the same tool that the consumers are using.”
And that’s true of providers in many systems. They may not know what their organization is charging for a service or certainly what it costs the consumer when filtered through the lens of deductibles, health plan, negotiated arrangements, et cetera. So those things all factor in.
And then there’s also a big one that when you’re afraid, when you hurt, when you’re sick, when you’re under duress, it’s really hard to behave like the hard-nosed consumer that you might be when you’re negotiating the price of a car. Just a very different thing. And we don’t take that into account in this drive to ask consumers to behave like “real consumers.”
Well, that wraps up today’s episode of For Your Benefits. We hope that you’ll continue listening to the next episode as Jan continues her talk on how to identify the regulatory changes that are contributing to the changing marketplace. And as she shares her approaches to managing health care that typically work and those that don’t work in a consumer economy. As always, if you’d like to learn more about Sentryhealth, visit our website at www.sentryhealth.com. And don’t forget, if you like what you heard today and you want to hear more. Don’t forget to subscribe to our podcast. Thanks for joining us.
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Want to learn more about SentryHealth? Simply fill out this form to request a consultation and learn more about our solutions.