2013 Accenture private health insurance exchange consumer research reveals employees will choose lower benefit levels

Consumers will make tradeoffs in return for a lower priced plan. For example, 25 percent would accept a deductible increase of more than $600 to save $600 in premiums.

According to Accenture analysis, enrollment in private health insurance exchanges will reach 40 million by 2018. As private exchanges emerge, employees are making their own healthcare coverage decisions from a broader array of carriers and plan options. Choosing coverage requires making complex financial tradeoff decisions, such as weighing one’s own health risks against personal financial circumstances.

Accenture engaged consumers in a mock private health insurance exchange experience to explore the decisions employees would make while enrolling for benefits. We found that more than 1 in 4 employees are likely to select a lower priced health insurance plan on a private health insurance exchange. Employee willingness to make tradeoffs is not unlimited; it depends on the availability of other options to manage their risk. For example, 81 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.

Some tradeoffs are substantially less popular—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 health insurance 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.