Trends Favor Self-Directed Healthcare

The new report, “Self-Directed Healthcare: Consumerism Hits Health Plan Purchasing”, from Dain Rauscher Wessels notes that approximately two-thirds of Americans under the age of 65 receive their health insurance through their employers, but suggests the system is ripe for a change.

Specifically the report cites:

• The rise in health care costs
• Increased frustration with the quality and choices of benefits available
• The unwillingness of employers to continue being health care benefit intermediaries
• The emergence of the Internet in the health care industry
• The potential regulatory changes and the shifting demographics

The report also cites a recent survey where 73% of employees were interested in the concept of choosing their own healthcare, although they are concerned about not having enough time or information to make the right choices – and in losing their employer’s assistance in handling claims and complaints.

The paper outlines the following potential positive impacts of a shift to a self-directed system:

• Employees – the change is expected to greatly expand employee choice, compared with today’s system where half of large employers and 90% of small employers offer only a single health insurance option.
• Employers – Self-directed plans could reduce employer costs, trim administrative expenses and reduce liability exposure. In fact, the analysis indicates that employers spend $4,000 -$6,000/year per employee on health benefits. Additionally, this approach would permit the employer to focus on their core business, rather than health care administration.
• Health Plans – should have an opportunity to provide better customer service to an involved consumer.
• Providers – the report suggests that less interference in the provider/patient relationship could mean better service and lower costs
• The System – a greater awareness of costs increases the odds of good choices that could stem the rapid growth of healthcare costs.

On the other hand, the report notes that unlike a 401(k) plan, the employee will know within a year whether they are better or worse off under the self-directed healthcare approach. Consequently, employers likely won’t be able to simply provide a defined amount of money for the employee to buy coverage and let it end there. Additionally, if the approach is to prove economical employer involvement will likely be required to ensure a discounted group rate.