by Richard Hamer 14-Oct-2019
A
Striking Memory
A few years ago, my
colleagues and I were watching a focus group of seniors talk about their health
insurance. The discussion was compelling, and we leaned toward the glass
as people described their experiences, fears, suspicions, and rationales.
It was already a lively discussion, so we were surprised when dental benefits
came up and, all at once, everyone was sitting up straighter, beckoning to the
moderator to call on them next.
Confirmed
by Research
Over the course of many
years of research on Medicare and under 65 populations, we have observed that
dissatisfaction with dental benefits is the most frequently cited reason for
consumers to shop for a different health plan. For example, in each year
between 2016 and 2019, approximately 25% of seniors indicated that their dental
benefit did not meet their needs and was a top motivator for seeking an
alternative health insurer.
The
Market for Dental Benefit Plans
Dental coverage is not
regulated as is medical coverage, consequently insurance companies are not
required to provide a minimum benefit. Dental plans tend to be highly
constrained with most limiting total annual coverage to less than $1,500.
This means that if a patient undergoes a serious procedure, they will likely be
saddled with a hefty bill. Many consumers are not willing or able to pay
high out of pocket expenses, leading them to live with untreated
problems. Deft’s 2018 Medicare Member Experience study found evidence of
this: 9% of seniors were living with dental pain and 19% had trouble eating
because of a dental issue. Knowing that untreated dental problems abound,
insurance plans are loath to enrich their benefits and attract a high-claims
population. (see Medicare Member Experience and Engagement Study,
Deft Research, 2018)
Millions of consumers are
not happy with their dental benefits, this spurs them to shop for alternatives,
but when they do, they find a market of unsatisfactory choices. For this
reason, dental benefit dissatisfaction has not been a top concern of member retention
or loyalty managers at health plans. Dental benefits may consistently
disappoint, but not many consumers can find anything better. The
disappointment doesn’t lead to disenrollment.
Will
Competition Lead to Better Dental?
For Medicare Advantage
and other insurers, addressing the unmet dental needs of consumers falls within
both the mission and the business requirements. In many markets,
competition for individually insured seniors and under 65 consumers is
fierce. Dental benefits could be a way to unlock the consumer value
needed to attract a larger market share.
United Healthcare, Aetna,
Humana and others are hammering the competition with low and $0 premium
Medicare Advantage plans. Any plan interested in being more attractive
than the standards set by these titans may need to look at
dental. According to our research, a superior dental offering would
draw the interest of 25% of Medicare Advantage members and 40% of Medsupp
beneficiaries. (see Medicare Member Experience and Engagement
Study, Deft Research, 2019).
Opportunity
In the Medicare dental
market, the preferred means of offering dental is to embed it in the health
plan. Few Medicare health plans add a noticeable dollar amount to premium
for these embedded dental benefits. In other words, the benefits are
serving as “table-stakes”: the minimum offer required in order to make the
overall health plan a credible choice for most consumers. Health plans
are not delivering, and possibly not attempting to deliver, consumer value
deemed by consumers as worth paying more for.
A quick review of dental
benefits shows where the opportunities may lie. First, we note that when
a dental benefit is offered as a “rider” (an add-on) and has its own premium,
the average is around $24, but can be as low as $3 or as high as $39. For
this attribute, the high value is more than 10 times the low. This
indicates that dental insurance providers have determined that a market exists
for both lean and richer benefits. The tactic most Medicare Advantage and
other insurers employ of offering a one-size-fits-all dental benefit may be
missing an area where value could be added.
Wide ranges characterize
the dental benefit market. Annual limitations range from $250 to more
than $2,000. And out-of-pocket charges for specialists or advanced care
can be as low as $0 or as high as $500. If we zero in on a single
procedure, we see that out of pocket charges for a crown range from $295 to
$500 or from 30% to 70% coverage.
The variability of prices
and out of pocket expenses exposes an opportunity. The variation is a
characteristic of a market in which decisions are driven by closed internal
processes. We think it indicates that these decisions lack understanding
of the willingness to pay of consumers. Dental plans may know the demand for
services but have less complete understanding of price sensitivity.
Unlike medical treatment, dental care is easier to defer or do without, and so
price sensitivity for dental services is a much more potent factor than it is
for many medical services. Without both demand
and price sensitivity, the uncertainty and risk of offering an enhanced dental
benefit has rendered the decision impossible to make.
Deft’s
Research Response
Deft Research has
developed a research approach to help health insurers interested in developing
a sustainable dental benefit that increases the attractiveness of plans.
The approach uses conjoint analysis to do a deep dive into dental
benefits. With conjoint analysis the interaction between demand and price
sensitivity can be measured – the research can ascertain consumer need and
willingness to pay for services. We propose that services that are
representative of a category become the dental benefit attributes to be studied
in the research, categories being: restorative, periodontal, dentures,
implants, bridges, oral surgery and other. The research would show, how
changes in cost-sharing would alter the volume and type of consumer drawn to
the benefit. With this, the uncertainty and risk of an enhanced benefit,
or of offering a suite of lean to rich benefits, would be reduced, setting the
stage for a bolder decision.
National
and Local Studies
When thinking about the
entire health insurance package, dental benefits are just piece of consumer
consideration. To address this, Deft’s research approach achieves
efficiency with a National Dental Benefits Study and customization with local
market research. Both national and local market studies equip clients
with a market simulator that enables an unlimited number of product tests and
inquiries.
To learn more, please
contact Deft Research at info@deftresearch.com,
a representative will promptly respond.
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