by Richard Hamer 15-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 read
more, we are offering a free Executive Research Brief, please click
below to get it.
Contact
Deft Research at info@deftresearch.com.
No comments:
Post a Comment