I have a friend who recently started smoking. I was heartbroken when I found out not only because I really don't like cigarettes, but also because this story seems to discredit the long-term goal of consumer-directed health care: to change people's behavior in a positive way.
You see, my friend works in the employee benefits industry, so it's not like she doesn't know better. And she has an HSA, so she certainly has a financial incentive to make healthy decision. Worst of all, she's preached about the benefits of consumerism for years. If she's picking up bad habits instead of kicking them what chance do our clients have?
The optimist in me wants to believe that brokers truly can make a difference that the plans we sell and the information we provide really do encourage people to live healthier lives. And at the margins that's probably true for people who want to quit smoking or start an exercise program, a little extra push might be all they need.
But our health plan can't convince us to make healthy decisions. So does that mean we should just admit defeat and let the government take over? Absolutely not. Doing so would ignore the many other positive effects of consumer-directed health care after all, there's a lot more to consumerism than just changing behavior.
The most immediate impact of dropping the copays, of course, is that we'll see a reduction in premium. Our clients are buying less insurance, so they'll pay less for it.
Without the first-dollar coverage for routine expenses, our clients will pay more out-of-pocket. As a result, they'll use their plan differently utilization will go down. That type of behavior change is predictable. And as people have to spend their own money, they'll begin to wonder about costs. Then we'll see an increase in price transparency.
The availability of pricing data will ultimately create competition between providers, which can help to stabilize prices. But because price isn't the only consideration, we'll begin to see providers compete on quality as well if they're going to charge more, they'll have to justify it.
It seems pretty simple common sense really. But as we all know, common sense isn't really all that common, which is probably why some of our elected officials would like to see an end to consumerism.
So what about this whole lifestyle thing is there any way to get people to make better decisions? It's difficult, but definitely not impossible. In fact, study after study shows that, when implemented correctly, wellness programs provide employers with a huge return on investment. And when paired with a consumer-directed plan, particularly with an HSA, wellness programs deliver even better results. So my friend the smoker really is an exception while these programs won't work for everyone, they do have a positive impact and are worth keeping in the arsenal.
What's important to remember is that a consumer-directed strategy has a lot of important ingredients dropping the copays is a good start, but it's not enough. We must also set our clients up with some sort of spending account an HSA, HRA, or FSA. And we need to educate them about the price and quality comparison tools that are currently being provided by their carriers as well as other third-party vendors. These tools are getting better all the time, but achieving true transparency is going to require a grassroots effort consumers will have to demand it. And finally, we need to encourage our clients to implement a wellness program. Health insurance premiums are a reflection of the prices and utilization in the market, and the only hope we have long-term is to reduce the need for health care.
