In many areas, the American consumer is flush with choice and transparency in where and how to spend dollars. Rent or buy. California or Texas. Water, Coke, or Pepsi. Ford or Tesla. Gold health plans, bronze health plans, or alternative health insurance, particularly if spending your own money on a full sticker plan.
Healthcare has varying demands and problems, and consumers demand more choices.
Transparency
There are greater moves towards transparency, not just in prices at point-of-care but across the spectrum of swipes, plan selection, and billing. Most care is not something we interact with often, especially over 5-10 years, in which case premiums carry lots of weight1.
Americans should expect transparency from their employers. A sharper re-opened economy demands simpler enrollments, richer benefits, and lower payroll contributions. Health insurance benefits are not a commodity and vary hugely from firm to firm2. The best employers will cut the fat3.
Our Journey
Our health is our own 80-year journey that largely falls on us, our diet, genes, habits, environment, family support. Most don’t think about healthcare interventions often4. 19 of 20 working-age folks won’t see the inside of a hospital in a given year. Insurance is supposed to be protection against ruin, there when you need it, not something that covers oil changes (there are some exceptions where maintenance generic drugs are covered at zero cost since adherence can help avoid bigger claims).
Time & Dignity
People crave freedom of choice and control over their fate. Paytient, a growing financial technology firm, offers a benefit that gives employees the ability to pay for care at their own pace and without interest or fees, a wallet for everything from medical to vet care. HSA dollars can stay put and grow to pay for creaky knees in retirement, while employees have greater access to the prescription they may otherwise leave at the counter.
HSA Investments
Health Savings Accounts (HSAs) are used more as health spending accounts. As evidence: only 5% of the close to 30m accounts invest a portion of the balance. The rest with the inertia of the status quo while inflation eats into it the way rats ate Escobar’s cash. Smoother investment options, akin to target-date funds, or investment advisory firms such as Diamond Lake Capital, seeking superior risk-adjusted returns that also encourage more to enroll in HSAs, have a bright future.
Incentives matter
Traditional brokers and consultants get paid more the higher costs are and the more complicated the solutions are implemented. These are often chosen by a broker and HR head whose incentive is to not screw up too much. I win, I don’t share much of the upside; I insert something new and it goes south, I’m out of a job.
Transparent compensation and aligned incentives work. E Powered Benefits shares in the upside of reduced costs, all while offering richer benefits, savings to employers, and lower payroll costs to employees.
It’s time for greater transparency across all niches of healthcare. Lessons lie in revealed preferences (what people do) more than stated ones (e.g., surveys). As Nassim Taleb says, “Don’t tell me what you think, tell me what you have in your portfolio.” Marketers, well-informed consumers, and businesses capitalize on this. Consumers armed with all layers of transparency will do just fine over time.
—
Disclosures: my personal healthcare coverage is a $5,000 deductible cost-sharing plan (non-ACA). Healthcare investments: Covetrus, Cigna, HealthEquity. Olavi Group consults for Paytient. Joseph Andelin is a founding partner of Diamond Lake Capital.
Photo by Randy ORourke on Unsplash
- a family on average is likely to pay $240,000 either directly or via forgone wages in total premiums over the next 10 years alone.
- $8,000 spreads in family benefit costs from firm to firm are common. See this tool for examples
- employees don’t like wellness or its fancier brother wellbeing, especially if it means heavy sticks for non-compliance on petty things.
- I’m a male age 40 and haven’t had an inpatient hospital stay since I was one.
