U.S. Health Plans Can Save Billions by Helping Patients Navigate the System

Most people at one time or another have struggled to navigate the complexities of the U.S. health care system. Many have received unpleasant surprises, such as a medical bill they expected to be covered by their health insurance or an unexpectedly expensive bill for a simple service. This type of confusion results in a lot of administrative work, including avoidable calls to customer service centers or time spent helping people find lower-cost options for services. It is costing employers and health plans billions of dollars each year.

Recognizing this exorbitant cost, Accenture developed a literacy index to evaluate how well consumers can obtain, understand, and navigate information and services. We used this index to assess how health care literacy affected the performance of nine consumer experience touchpoints. We then calculated the correlating impact to administrative costs. From this, we identified strategies in which health plans could save themselves billions of dollars — by simplifying the “user experience” of a system that was not designed with the preferences of the consumer in mind.

Our analysis found the health care system is so complex that more than half (52%) of consumers are unable to navigate it on their own, triggering avoidable customer service calls and more costly care. Consumers with low health system literacy are three times more likely to contact customer service. Our estimates found health insurers and employers spend $26 more on administration fees for every consumer with low health system literacy. This translates into a total cost of $4.82 billion, which would be even higher if accounting for medical cost.

We found that consumers with low literacy struggle to make informed decisions about everything from the health plan types they choose and the premiums they pay to the doctors they see and the procedures they have done. It is worth noting this issue has nothing to do with education level: Roughly half (48%) of low-literacy consumers are college educated and nearly all (97%) have at least a high school diploma.

Difficulty in making informed decisions impacts consumers’ ability to get the medical care they need. This is especially detrimental for the one in four (26%) consumers who have both low understanding and the highest need for health care interventions, such as individuals who are facing chronic or serious conditions. While our study assessed the impact of low literacy on administrative expenses, two decades of research has documented the impact of literacy on the overall health economy — some estimate the cost to add up to as much as $238 billion, or 17%, of all U.S. health expenditures.

Education has a role to play in reducing costs for health insurers, but it alone will not eliminate the problem. To ease their cost burden, health plans should instead aim to simplify the user experience. Our research points to a few strategies that health plans can implement a new model of consumer service and engagement. This can be achieved by harnessing digital channels to make the user experience easier, incentivizing progress driven by other stakeholders in the system, and shifting the complexity burden off consumers.

Harness digital channels to improve user experience. While systemic complexity won’t be eliminated in the short term, health plans can approach service differently to make navigating the health care system feel simpler and easier. Amazon and other digital retailers have done just that. Consumers can select one-click options to get their delivery within a specific timeframe, but are oblivious to the operational complexity that goes on behind the scenes to make it happen. In today’s increasingly technological world, consumers expect this type of simplicity and digital access across all industries that they interact with.

One example of a company in the health industry that is seeking to simplify the process is Oscar Health, a New York City-based insurance company serving eight states and 250,000 members. While widely known for using digital, telemedicine, and concierge service to augment care, Oscar Health has also tackled operational complexity across core insurance functions, like claims processing, providing its 240,000 members with cost estimates for select medical services.

Incorporating intelligent technologies such as artificial intelligence to customer service initiatives can also help with delivering easy-to-follow programs and relevant products.

Incentivize progress. Another solution to cut through complexity is incentivizing health providers and consumers to work together in navigating health insurance options.

We know that providers influence where consumers go for health services. A recent NBER study found that, when choosing between low- and high-cost care settings, referring physicians had far more influence over where consumers sought care than cost did. Employer plans — such as those offered by startup Centivo — are bucking this trend by incentivizing physicians and patients to work together to lower the cost of care.

Other programs focus on educating consumers on how to choose affordable care settings on their own. Programs provided by Vitals, for example, offer consumers cash-back rewards when they select a lower-cost service or procedure such as an MRI or mammogram. Incentives such as these are more likely to drive consumers to change their behaviors, and in the process will educate them about how to make better and cost-efficient care choices.

Shift the complexity burden off consumers. Health plans also need to deploy new product concepts that take us closer to the goal of simplification and orchestrate service options to reach low literacy consumers on their terms.

For example, organizations can offer simple, per-visit copayments instead of complex deductible and coinsurance plans. That is what Minneapolis-based startup Bind Benefits is doing by offering employers on-demand plan options with no deductibles. The idea is to offer simple, straightforward pricing rather than complex plan structures so consumers can easily engage and know the price of their services at the time of consumption.

Ultimately, the only way to eliminate systemic complexity in health care is by actually making health care simpler. Rather than forcing consumers to battle the complexities, the health care system must design user experiences to align seamlessly with the needs, behaviors, and preferences of the people it serves.