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Accenture research indicates more than 1 in 4 employees likely to select a lower priced health insurance plan on a private health insurance exchange.
Private health insurance exchanges are radically changing the health insurance landscape. Market participation has already exceeded early expectations, and according to Accenture analysis1, enrollment in private exchanges will reach 40 million by 2018.
Some Americans on these private health insurance exchanges are already choosing lower coverage levels than their employer previously offered. These employees are opting for plans with lower premiums, and thus saving money on their short-term health costs by accepting tradeoffs, such as higher deductibles or narrower healthcare networks. Accenture’s Private Health Insurance Exchange Consumer Research shows that more than 1 in 4 employees may make a benefits tradeoff on their health insurance plan, with up to 1 in 3 accepting this tradeoff in the small employer market.2 Accenture surveyed 2,006 consumers in the United States, focusing on consumers between the ages of 18 and 64 who receive group health insurance through their employer or other affiliation, or significant other. The survey explored employee purchasing behavior in a private exchange setting.
Read about Accenture’s research and explore analysis when you download the full PDF.
View more from the Private Health Insurance Exchanges research and video series.
1 Are You Ready? Private Health Insurance Exchanges are Looming
2 The benefits tradeoff was measured for survey respondents who either spent less than the available contribution for health insurance or selected the lowest priced (by premium) plan available; benefits tradeoff rates varied by employer size and contribution level
Health insurance plan tradeoff decisions historically have been made by employers who have selected benefits with the intent to produce the best results for the greatest portion of their workforce. Today, 87 percent of employers only offer one type of plan—such as a PPO or HMO.3 As private exchanges emerge, employees are making their own healthcare coverage decisions from a broader array of carriers and plan options.
Choosing healthcare coverage requires making complex financial tradeoff decisions, such as weighing one’s own health risks against personal financial circumstances. Although employees are empowered to “choose what’s right for me,” it’s difficult to predict whether these choices will work out as expected. Employees who look for initial savings on health insurance will need to be prepared for higher costs that could potentially arise from unexpected health incidents.
To understand the prevalence of this tradeoff effect, Accenture engaged consumers in a mock private health insurance exchange experience to explore the decisions employees would make while enrolling for benefits.
3 Kaiser Family Foundation Employer Health Benefits Annual Survey 2013
Accenture’s research showed that consumers are willing to embrace some tradeoffs in return for a lower priced plan, yet remain wary of others.
Although employees are willing to make some tradeoffs in return for lower premiums, their willingness is not unlimited; it depends on the availability of other options to manage their risk. Take deductibles, for example. Eighty-one percent of employees would be willing to increase their deductible to save $50 a month/$600 a year. However, most employees are not willing to accept this deductible increase if it is more than the value of their annual premium savings. For example, Accenture’s survey found only 25 percent of employees would accept a deductible increase of more than $600 to save $600 in premiums. Some tradeoffs are substantially less popular with consumers, such as network flexibility. Although many insurers are touting the value of narrower networks to reduce premiums in an exchange environment, consumer appetites for these plans may be limited.
The income gained by selecting lower priced health insurance could be used on ancillary benefits. Accenture findings suggest that this new pool of “discretionary premium dollars” could grow as high as $4 billion by 2018 as private exchanges continue to pick up momentum. However, some employers will also offer the option to “cash out” a portion of these funds, for example, by contributing to spending or retirement accounts.
Of those with employer contribution funds remaining after selecting health coverage, 57 percent continued to shop for other ancillary benefits rather than cash out. Additionally, 48 percent of those who had already exhausted their employer contribution expressed a desire to continue shopping.
These findings present a promising growth opportunity for ancillary benefits providers, so long as they can effectively market and sell to consumers to gain share.
December 6, 2013
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