For all the discussion about lowering the cost of health care and providing health benefits, is there a more important arbiter of employer satisfaction with a health plan than holding down cost trends? Maybe so, according to the results of the latest survey from J.D. Power and Associates.
Rick Millard, the senior director of the health care practice at J.D. Power and Associates, believes that so much attention is paid to the cost of health care that the other components of what an employer wants may be obscured or overlooked. The firm's annual health plan satisfaction survey, including just over 7,000 employers from all-sized companies, found that processing claims accurately and effectively, providing customized cost management solutions and ensuring that the insurance carrier representative understands the employer's specific needs have a particularly strong effect on raising employer satisfaction with health plans.
"As employers evaluate how implementation of health care reform will affect coverage for their employees, it's critically important for health plans to understand what is really driving their satisfaction," says Millard.
The survey further found that specific errors - problems with claims processing and errors on member enrollment cards - have a particularly strong effect on employer satisfaction. Even a small percentage of errors can have a noticeable impact, J.D. Power notes.
Millard compares it to the airline industry, which he says have a reputation for low satisfaction, similar to health insurance carriers.
"Like airlines, there is a prevailing assumption that people make their decision based on cost, but service experience has more to do with the actual satisfaction," he explains. "For example, in our airline study, carriers like JetBlue and Southwest do quite well and traditional mainline carriers don't do so well."
"It's not so much about cost," Millard says, "but do they provide a better service experience. It may be small things like seat pitch or courtesy of personnel. With health plans, we found cost was not a big a driver as some of those other topics."
As a result, Millard thinks that if you are a small employer or deliberating about whether to continue to have employer-sponsored coverage or renewing with the same carrier, "then the service experience will have some impact on your decision," he said.
Feedback from employer groups is that total cost of care and affordability continues to be their primary concern, says Paolo Borromeo, principal at Chicago-based consultancy Booz & Co.
Although it is not a totally straightforward question, companies are concerned about service and fees, says Towers Watson senior consultant Tom Billet, who makes a distinction between small and large employers - who tend to be self-insured and worry more about service but are still concerned about fees.
A little of both
Yet, Borromeo and Billet agree that customer service is becoming increasingly more important in what employers are seeking from their carriers.
"[For example, carriers] are not just expected to process billing and claims in a timely fashion but to provide enhanced employer and employee reporting, clinical support and service, health information tools and health advice to employees," says Borromeo.
When looking at insurance options, companies look for a lot of things, not just service versus price, Billet adds. They also look at level of provider discounts, size of the provider network and health management programs they offer, among others, he says.
Companies are also looking at various ways to manage costs, says Borromeo. "Some of the more innovative employers are looking at ways to partner with providers through retail clinics, expand[ed] prevention and health and wellness services for their employees, and experiment[ing] with new approaches, benefit designs, and health information tools to increase employee engagement," he says. "We also anticipate more mid-size companies considering converting to self-funded arrangements . . . to be able to better manage costs and avoid potential future rate increases."
Will employers drop coverage?
But neither service nor cost may be the overriding factor when employers decide whether they will drop coverage once state-run health care exchanges (created under health care reform) open in 2014; rather, the need to attract and retain talent may trump both concerns.
"For the most part, companies don't offer health insurance because they want to but because they have to," Billet explains. "Because their competitors do," and they need to attract employees to their company.
As a result, Billet says, companies may opt to drop coverage if the costs are too high and they feel competitively they can get away with it, which is a key distinction. "I think the vast majority of them if they could get out [of offering health insurance], they would," he adds.
And, a report from Booz concluded that traditional employer-based insurance will remain a significant market that will erode more slowly and less steeply then commonly thought after the health reform laws begin coming into play.
The Booz report says that employers, though concerned about rising premiums, are unlikely to abandon employer-based health plans and force workers to find coverage on the exchanges.
Most feel moral obligation to provide benefits
The majority of companies will continue to offer coverage for a variety of reasons, including a moral obligation to provide benefits, says Borromeo, who worked on the report.
"As employers evaluate the value differential, i.e., the costs and benefits of dropping coverage, many anticipate that the savings, after incorporating tax implications or the additional income needed to make employees 'whole,' is not significantly enough to offset the potential downside, including organizational risk and disruption," he says. "Finally, there is a significant hesitance in believing that the exchanges will immediately crate an affordable, effective alternative option for employees - for the most part, many employers will take a wait-and-see approach."
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