This post originally appeared in Workforce on August 1, 2018.
Once a promising benefit design to reduce unnecessary health care spending, the consumer-driven health plan (CDHP) has had limited impact on improving consumer decision-making and employer cost savings. In theory, CDHPs encourage consumers to “shop” for health care by paying close attention to cost and quality tradeoffs. In fact, evidence shows that the exact opposite is true. Instead CDHPs have caused consumers to skip both necessary and unnecessary care due to the out-of-pocket costs they face prior to meeting their annual deductible.
To manage cost without sacrificing quality or access, more employers are thinking carefully about how to combine health care payment and delivery reform, benefit design and provider network design, such as in an accountable care organization model. ACOs, which feature a network of health care providers that have responsibilities to coordinate care and manage the cost of care, along with incentives and disincentives to do so effectively, now cover more than 10 percent of the U.S. population.
Employers, other health care purchasers and payers are investing in these efforts by building benefit and provider network designs that encourage consumers to use ACOs. However, to get consumers to select these benefit options, purchasers and payers face some barriers.
Cognitive biases are pervasive in every aspect of decision-making, and health care is no exception. Understanding the obstacles consumers must overcome to make informed choices about insurance products and health care providers can help employers design and implement effective benefits offerings and communications strategies.
First Barrier: Health Care Complexity
A deciding factor in whether consumers choose to take action the way we want them to is whether they understand what they are being asked to do. But according to the Employee Benefit Research Institute, there is strong evidence that workers lack the ability to successfully navigate the complex and technical nature of health care. Moreover, a Consumer Health Mindset study found only 40 percent of consumers know where to go to figure out the price of a health service they need or want. Research also shows most adults have a low level of health literacy, lacking the ability to process, understand and act on health information to make appropriate choices.
Learn from employees. As a result, employers must learn what employees care about and where they struggle in their health care experience. What motivates employees to enroll in a particular plan — such as cost or convenience — or prevents them from enrolling may not be obvious.
Second Barrier: Apathy, Inertia and Status Quo
There is an implicit bias toward the status quo when making decisions. This predisposition prevents consumers from carefully considering cost and quality tradeoffs or researching them prior to the moment of decision (in cases where information is available). Change can be uncomfortable and even upsetting.
A large tech company, for example, learned that the primary reason employees chose not to enroll in their new ACO plan was that it was easier to stay in the plan they already knew. Along with deciding whether to enroll in a new plan option, consumers were weighing whether the change, and potential losses from it (e.g., losing access to a key medical provider), were greater than the potential benefits (e.g., ability to access a provider after hours or virtually).
Design the easy choice. For consumers to make a change, the benefits must clearly outweigh the risks. When employers design programs that make it hard for employees to say “no” to enrolling and that inspire confidence that they made the right choice, employees may be more likely to select them. This could mean, for example, offering coverage levels comparable to those in existing plans and/or lower premiums.
Require active enrollment. Requiring active participation during annual enrollment and defaulting those who do not participate into the new plan can be very effective. Employers that include space in benefits communications for employees to write down in concrete terms the action they plan to take and how to do it can also increase active enrollment’s effectiveness. However, employers should use active enrollment sparingly, so it retains its power when they must drive action.
Third Barrier: Established Providers Are Not in the Network
Consumers value their relationship with their doctor with 89 percent saying it’s important. They want to be able to continue seeing the same familiar person who administers their care and may be unwilling to change providers.
One large company asked its employees who didn’t enroll in a new ACO plan, “What would it take to enroll?” Over 60 percent of respondents answered, “my doctor needs to be in-network.”
Make it easy to see who is in the new network. The survey also revealed the main reason employees do not change plans is uncertainty around whether their current providers are in the new network. Therefore, it is critical to provide robust provider-search tools that help employees quickly and easily determine if they can keep their current provider. Communications to employees should boldly promote such tools.
Fourth Barrier: Information Overload
With so many competing sources of information — employers, health plans, doctors, commercials and more — it can be hard for consumers to know what to do and whom to trust. As choices increase, the likelihood that someone will take action decreases.
Think like a marketer. Borrow a page from the consumer marketing playbook and develop multi-channel communication campaigns that are targeted and fully-branded, with simplicity at the core. Personal stories can make communications more relatable and compelling. If a plan has been around at least one year, testimonials from current enrollees can help. If it’s the initial launch phase, quotes from leadership about why they’re choosing the new plan can also help.
Changing deeply ingrained behaviors requires persistent nudging and smart design. To do this, employers need to communicate effectively about the new plans to draw employees’ attention to them while simultaneously shifting their focus from the numerous barriers to enrollment.
It takes effort, but by leveraging these best practices, employers can successfully drive enrollment into high-value health plans.