- Principle #1: Give Them Money and Let Them Shop
- Principle #2: Provide True Price Transparency
- Principle #3: Provide Meaningful Choice
- Principle #4: Offer Guidance in the Form of Decision Support
- Principle #5: Optimize the Shopping Experience
- Principle #6: Ensure a Cultural Fit Within the Organization
- Principle #7: Refine, Iterate, and Improve
- Summary
This chapter is from the book
This chapter is from the book
This chapter is from the book
Principle #3: Provide Meaningful Choice
Just like any other store, an online benefits store needs to have the right range of products and prices, the right brands, and options that are appealing to a broad range of people. By incorporating mechanisms (such as a recommendation engine for decision support) for understanding what people want and need, a marketplace can provide the appropriate levels of customization, information, and choice. The resulting buying patterns can yield much more effective information over time than the annual “guess the spread” exercise so many brokers undertake with their spreadsheets each year, which ultimately is like trying to guess the stock market. When you continually refine and hone your store offerings based on actual usage patterns, you operate more like Amazon and Zappos in stocking inventory than you do a financial advisor trying to predict the market.
When consumers are given the right amount of choice and can spend their own allocation of money, they seek the best value for their dollars. This economic principle works for both the supply- and demand-side actors in the health care benefits transaction. Employers can save time because they make one big decision—how much money to allocate to employees—and then let their employees do the rest. Companies do this in other ways; for example, they pay their employees a salary, which the employees may use to buy their own homes, cars, and TVs as well as choose their own investments, including complicated financial products such as 401(k)s. Employees make big decisions with high price tags every day, and no one says they’re not qualified to make these decisions if that’s what they choose to do with their money.
By having employees self–select their own insurance and other products, the supply side is incentivized to become more competitive and agile to adapt to these preferences and encourage higher adoption by offering more of what people want. Because employees can use any remaining funds from their employer’s defined contribution or supplement with their own money to ensure that they have the right protection in place for their needs, insurance carriers can create innovative products, such as hospital indemnity insurance or accident insurance, to meet particular needs. And it stands to reason that in spending these dollars, people are going to be very smart because they’re not only allocating a fixed amount from their employer but potentially spending their own money. They’re going to ask questions and make decisions that work for them, and they’re going to be more engaged in these decisions.
For example, a young, single shopper may choose a health plan with a lower premium and higher deductible, along with a health savings account (HSA) to help save for qualifying expenses with tax-free funds. (Data based on actual usage from Liazon exchanges show that 4% more Generation Xers and 8% more Millennials buy HSA-qualified plans than Baby Boomers.)10 Those who are healthy and free of chronic medical conditions are more likely to choose a narrower network of doctors. A married employee with four children may choose a dental plan that covers orthodontia. Another employee may need a personal health coach to help him quit smoking. This variety of needs calls for a store that presents a number of different options.
MORE CHOICE = MORE HAPPINESS
Employees are gravitating toward high-deductible health plans (HDHPs) as they better understand their roles as consumers and the ability of these new options to help them control costs. Findings from the Kaiser Family Foundation indicate a 25% increase in high-deductible plans from 2006 to 2016 (see Figure 1.4).11 Liazon’s own data have shown that, on average, 46% of employees choose an HSA-qualified HDHP12; recent industry averages from United Benefits Advisors place this figure at 17%.13
Employees are also showing higher satisfaction with making their own choices over benefits. Nearly all employees Liazon surveyed (94%) reported overall satisfaction with their exchange experience. When we dug a little deeper to determine what specific factors delighted employees, we discovered that 96% of employees found the extensive education and decision support tools to be an important part of the marketplace, and 84% found the recommendation they received from the system to be helpful. In addition, 92% of employees said they were satisfied with the benefits choices available.14 These findings are especially impressive given the distrust and confusion surrounding health care and health care reform in recent years.
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Figure 1.4 Enrollment in High-Deductible Health Plans, 2006–2016.
Liazon also found that 97% of employers are satisfied with their exchange experience,15 and they are making considerable strides in understanding how important it is for their employees to be in the driver’s seat about these decisions; 98% of employees believe it’s important to be able to choose their own benefits rather than have their employers choose for them. This is a meaningful finding when evaluating benefits as a retention tool because various studies,16 in addition to Liazon’s own research, have found that the quality of benefits offerings are increasingly affecting employees’ intention to stay with their employer. Further, Liazon’s research indicates that 92% of individuals who choose their benefits through an exchange are satisfied with the benefits they chose one year later.17
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