The real value of health insurance: financial protection | Segal Benz

This post is the third in a series about the importance of health education and literacy in the evolution and success of our nation’s health care system. Employers play a significant part in that success, as a reliable and trusted source of health information to their employees. Also see the first article about the importance of health education and the second on ways to improve health literacy.

When we talk about health insurance—and complain about health insurance—the focus is usually on immediate access to health care services and out-of-pocket costs. Who’s in the network? What’s the deductible? How much is the copay? How many hoops will I have to jump through to use the plan?

What gets lost that dialog is the insurance side of the equation. The main role of health insurance, after all, is financial protection. Still, one’s total out-of-pocket risk is rarely calculated during the buying decision.

Out-of-pocket exposure is so sidelined that few noticed when the ACA-mandated Summary of Benefits and Coverage didn’t standardize the out-of-pocket maximum definition—the key to understanding that financial risk.

Without clarity about the financial protection that comes with health insurance, employers cannot accurately educate on the value of their benefits. Especially in a world of high-deductible health plans with large out-of-pocket costs, the financial protection is where the real value comes in.

In fact, a large ongoing study, “The Oregon Experiment,” proves health insurance isn’t just about health. In this study, social scientists are tracking the outcomes for Oregon residents who “won” the Medicaid lottery. The study excites scholars because getting a truly random sample of people is difficult. Self-selection into health insurance can cast a long shadow of doubt onto the results of most large studies of health insurance outcomes. Two years of data show insurance didn’t improve health outcomes, but it did improve mental health outcomes. It proves what we already know intuitively: that the financial protection of insurance is valuable in measurable ways.

We know that prevention and wellness feel good and a lot of effort is put into communicating the value of those benefits as part of health insurance. But, it is time to talk more about the financial security that health insurance affords. Annual enrollment is a powerful time to do that, especially for employers who need to educate about the value of their plans now more than ever. Here’s how:

1. Tell a relevant story. Financials are emotionally loaded for most people, as is health. Storytelling allows us to give context, provide facts and examples. While you work through scenarios that compare your plan options, include the aspect of financial protection, not just out-of-pockets costs.
    
2. Don’t be shy about saying you’re self-insured. Talking about how your company funds health insurance, and the ever-important difference between self-insured and fully insured plans, provides a good illustration of financial benefit and risk. If your company is self-insured, give yourself credit for that investment in employees’ financial security.
    
3. Link together all the elements of financial security. Do you separate your health plans from other insurance products? Perhaps you always communicate health and financial benefits separately? Connect the dots for employees about how health benefits provide financial protection and how financial benefits alleviate stress, helping to allow employees to take care of their health and their families.