Vitals: Wrestling with choices - Health insurers forcing consumers to be savvy shoppers

Say what you will about the effects of disco and the oil embargo on the national psyche, but the 1970s were a simpler time when it came to health care. By the end of the decade, 97 percent of large and medium-sized companies provided health insurance coverage to employees, and often just a single plan. For seniors, privately administered Medicare HMOs existed, but they weren’t very popular.

Choices were limited, and those who lived through the decade spent no more time thinking about health plans than they did their cable plans.

But the 1970s also proved a tipping point for health care.

Employers, nervous about the increasing cost of medical claims, first began agitating for a national health plan, then began to pull back (slowly) on benefits offerings, meaning more Americans — even the gainfully employed — had to fend for themselves. The federal government was moving (slowly) to a system that would allow private insurance companies to administer more and more of the nation’s Medicare plans. Over four decades, our health care system (slowly) shifted benefit and budgetary decision-making away from insurers, and toward consumers.

It has been a long time coming, but more U.S. patients are becoming exposed to retail-style, consumer-driven health insurance. Exposure doesn’t always mean acceptance, though.

“Consumers have been used to being taken care of,” said Mike Thompson, a global human resources principal and health benefits expert with PricewaterhouseCoopers. “For many, this new empowerment certainly is confusing, and on some level may not even be welcome. … But on balance, I think that it’s probably a healthy transition, so [customers] can make choices that are consistent with their needs and values.”

These days, those choices can be found in every segment of the consumer health insurance market: Seniors can choose from dozens of Medicare Advantage plans in Allegheny County, with commercial carriers competing for customers. Those buying on the individual market, through Obamacare’s HealthCare.gov, have 60 distinct plans to choose from in Pittsburgh.

"Consumers have been used to being taken care of. For many, this new empowerment certainly is confusing, and on some level may not even be welcome."

Choice is growing in the group market, too. About 43 percent of U.S. private sector companies offered two or more health plans to employees in 2012, including almost 80 percent of large companies with 1,000 or more employees, according to the Agency for Healthcare Research and Quality. And a growing number can choose from dozens, because their employers have opted to enroll in private, defined-contribution health insurance exchanges. This year, for example, Walgreen Co. pharmacies switched to a private exchange operated by Aon Hewitt; instead of having two plans to compare, Walgreens’ 250,000 employees have two dozen plans, offered by five different carriers.

“Health insurance might be one of the last [areas of commerce] where individuals are getting more choice,” said Paul Fronstin, director of health research at the Employee Benefit Research Institute in Washington, D.C. “Until now, we’ve never really had the technology to enable it.”

The technology that enables comparison shopping of health plans is, in some ways, merely a new twist on old ideas. So-called “cafeteria plans,” which gave employees the ability to choose what sorts of employer benefits they wanted to receive (and pay for), have been around since the 1980s, thanks to a change to the Internal Revenue Code in November 1978. And federal government employees typically choose from among dozens of health plans.

Yet through the decades, employers and employees preferred to “stick with what you know,” Mr. Fronstin said. But today, people know choice — cars, cell phones, electricity providers — and they’re warming to the idea of shopping for a health plan as you would any other retail commodity. Some insurers have opened kiosks in shopping malls or even retail health insurance stores with expanded hours to accommodate increased walk-in traffic.

After all, if Apple can open stores dedicated to its own products and brand, why not health insurers?

National insurers Humana, UnitedHealthcare, Kaiser Permanente all have retail stores. Regional Blue Cross Blue Shield insurers in Florida, North Carolina and Minnesota have all opened stores in the last few years (Minnesota’s just last month). While the stores aren’t necessarily money-makers, insurers are betting that they could be in the future — the number of Americans buying non-Medicaid, non-Medicare individual plans should double between 2011 and 2020.

“As the decisions shift toward the consumers, [it’s] even more important for those insurers to educate, and increase their branding,” Mr. Thompson, of PricewaterhouseCoopers, said.

Once the plan has been selected, you can stop thinking right?

Wrong — employers and insurers (less so the hospitals and doctors) want us to have a financial skin in the game, giving us financial incentive to be more careful shoppers. The hope is that drawing patients more deeply into the shopping process will not only reduce the cost of care for employers and insurers, but also, in the long run, improve the health of beneficiaries.

Sally Poblete, a health insurance expert and CEO of Wellthie, a health care technology company, called the ongoing education process a “learning continuum.”

“As an individual, the first step is to learn about [plan options]. What’s the universe of the choices that I have?” Ms. Poblete said. And “once you have a plan, how do you actually get the most value out of it?”

Expecting beneficiaries to make informed choices in an information vacuum is folly, so insurers have spent a decade building health care decision-making tools, cost and quality databases, and other guides that are meant to help patients weigh their options. But in order to goose customers in one direction or another, that data often comes tied to a higher-cost benefit plan design. Consumer-directed health plans often feature higher deductibles, co-insurance personal spending accounts and other features that expose patients to the cost consequences of their choices.

The trick is finding the right cost balance — move the right amount of cost-sharing to the customer, and perhaps they become better shoppers. Move too much, and they end up deferring needed care, or avoiding it all together.

And that can backfire on everybody, particularly if a small health issue becomes a more pressing one because of delayed care. If cost-control mechanisms “essentially create a barrier to people getting the care they need, [it] actually ends up in a poor outcome, or a more costly situation later on,” Mr. Thompson said. “Employers are trying to be sensitive to those issues.”

Employers are also sensitive to the fact that some people are simply more interested in maintaining their own health than others. That’s why insurers and employers are increasingly asking employees to participate in wellness surveys, lifestyle assessments, biometric screenings and other programs designed to identify high-risk employees. Many employees are rewarded with gift cards or even lower premiums for participating in the surveys, while other companies take a more punitive approach.

The reason? High-risk employees often become high-cost patients.

“Twenty percent of the [population] accounts for 80 percent of the spending,” Mr. Fronstin said.

Bill Toland: btoland@post-gazette.com or 412-263-2625.