A confluence of developments has changed the landscape of coverage demand.
By Annmarie Fini
In just the past 12 months, a dynamic shift in the thoughts and actions of healthcare consumers has occurred. The passing of the Patient Protection and Affordable Care Act, the national economic downturn, the rising cost of employee health insurance, and a continuously growing trust in online shopping have all played roles in this shift toward growing expectations. Consumers expect a simple and convenient shopping experience that consolidates all their options and the information needed to make an informed decision in one place.
The passage of healthcare reform, however, has created confusion among consumers. The extensive law has many provisions that will go into effect over several years. This creates an issue with consumers who like to have a clear understanding of all decisions that affect them and their family, especially when it comes to healthcare.
The burden of communication is increasingly placed on insurers and employers, who must clearly explain new options to consumers. Additionally, the employer and individual mandates will bring an entirely new group of consumers to market that may be less experienced in purchasing health insurance. The requirement for states to build exchanges by 2014 will help these consumers find and compare plan offerings and prices to determine what the best plan is. The exchanges will also drive down costs, as health insurers will be competing with each other for not only the direct consumer, but the business of employers shopping for their employees as well.
During the past year, the economy has proved to be difficult for both consumers and employers alike. Employers have been passing on more insurance expenses to their employees, and consumers are struggling to understand the complex details of health insurance options. Each consumer demands information, multiple options and competitive prices. People want information that will enable them to make smart decisions. Health plans are being scrutinized now more than ever, and each deductible, co-payment, Flexible Spending Account (FSA), and Health Savings Account (HSA) is being researched in greater detail. Consumers are trying to be conservative when it comes to any type of spending, and the cost of healthcare is being placed under the budget microscope.
Shift Toward Internet Shopping
Internet shopping is no longer a stranger to many consumers. Each year, consumers have become more and more comfortable with sharing information online. Online shopping has become the most efficient way to plan, research, compare, and buy products from music to furniture. Consumers are leveraging online resources for purchases and decision support, and no longer require a face-to-face or telephone interaction to buy a “big ticket” item. One firm that tracks such data, comScore, Inc. recently reported that retail e-commerce spending for the entire November–December 2010 holiday season reached $32.6 billion, marking a 12-percent increase versus last year and an all-time record for the season.
The Internet has forced companies to change the way they do business. Power-house shopping sites such as Amazon and iTunes allow consumers to view photos of products, or sample clips of music. These shopping sites give detailed descriptions of the products, allow for customer ratings and reviews, and then provide a simple, convenient, and user-friendly way to purchase each item. Some sites even go as far as using analytics of past views and purchases to make recommendations for items you may want to purchase.
Internet-based companies have forced store-front companies to change the way they use the Internet. Yet store-front owners still have the advantage, due to face-to-face interactions with consumers through which they can build relationships, answer questions, and discuss the products beforee purchase, making it unlikely that physical stores will cease to exist. However, stores such as Walmart have combined the best of both worlds. They offer the ability to research, compare, and purchase items through their website, but also give the option of having the items put aside or delivered to the store for in-store pickup. This gives the consumer the ability to do the proper research but still have the traditional face-to-face interaction that many people will always desire.
The New Approach to Insurance Shopping
The joint approach between online shopping and face-to-face interaction is an organizational shift that must be accommodated by insurance companies. Consumers expect to sit down at a computer with the capability to research, compare, and evaluate insurance plans. This is even important to consumers who choose to meet with an insurance broker. The new consumer is skeptical and wants to go into a sales situation with as much knowledge about a product as possible. The Healthcare Reform Law exchange provision is forcing insurers to make this transition to Internet-based shopping. These exchanges will allow consumers to compare plan offerings and prices side-by-side to determine which the best plan is for each individual.
Information is the key to make understanding the complexities of health insurance offerings as simple as possible for each employee. Employers need to effectively communicate the differences, benefits and costs of each plan. As employers raise the cost of benefits, employees are going to demand answers. By explaining the terminology and creating a clear understanding of each plan, Human Resources professionals can help employees see how each plan will protect both their health and finances. However, employers need to be careful not to overwhelm their employees. Too much information that is not directly relevant to the employee will lead to information overload, only furthering to confuse and prolong the decision process.
With more consumers using the Internet for shopping, employers should also allow enable their employees to shop online. Online HR management portals are available to help employers do just this. These websites contain plan comparison tools, offer links to common yet complex terminology, and some allow for video to be used as a method of communication. Employers can also use online enrollment, which gives consumers the power to change their minds, save and return, reduce errors, and access personal health information from anywhere at any time.
By adapting tools such as a benefits portal and effectively communicating with employees, employers can remove a large burden from their HR departments and reassure employees of the choices they have made.
So, consumer trends have shifted towards the use of the Internet for shopping. Even if consumers do not make their purchase online, they do use Internet sources for research, price comparison, and product reviews. This dynamic shift will continue with the healthcare industry, as consumers demand a full disclosure of information. Consumers want all the information available about a particular product before they make a decision.
People expect immediate access to information and need to be able to compare differences between multiple insurance plans. With the additional complexities and confusion brought about by healthcare reform, employers must effectively communicate the changes in their benefit offerings and the options available for each employee. By listening to what the consumer wants, employers can increase the efficiency of business, reduce errors, and satisfy employees.
Annmarie Fini is senior vice president of the employer division at Benefitfocus.