INFObrief Deloitte 2012 Survey of Health Care Consumers Health plans challenge; delivering on consumer preference

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1 INFObrief Deloitte 2012 Survey of Health Care Consumers Health plans challenge; delivering on consumer preference Highlights: Consumers move toward control Health care consumers are ready to shop for insurance and customize the plans they buy. They want more choices and better tools to find the right fit and the best value. Why now? Consumer satisfaction with health plans is decreasing. Over the past few years, consumers have become less likely to feel adequately covered or that their needs are well-met. Those who changed insurance plans in the past year said their key reasons included cost, coverage, and customer service. Background This INFOBrief presents key findings about consumers utilization of the U.S. health care system in particular, consumers and health plans from the Deloitte 2012 Survey of U.S. Health Care Consumers. INFOBriefs also are available on the topics of consumers and health information technology; utilization of health care services; and life sciences products and innovations. For the full report: 2012 Survey of Health Care Consumers in the United States, 2012 Consumer Study Infographic, Five-Year Look Back, INFOBrief source questions and other INFOBrief reports, visit com/us/consumerstudies. Consumers show they re interested and open-minded when it comes to considering new business models and different ways of purchasing health insurance. They re willing to consider trade-offs such as reduced access to network breadth in favor of lower premiums, or higher initial premiums that let them pay less at the point of service. Many are interested in shopping for health insurance on their own and in customizing the contents of their plans. However, they don t find they have enough sources of reliable and trusted information to facilitate this process. The health plan industry is moving slowly towards a new business model that envisions more individual insurance purchases and fewer people using employer-sponsored plans. Many consumers particularly younger ones are open to new ways to buy and pay for health care insurance. They show interest in models that make it easier to make choices and products that allow customization and personalization.

2 Key Findings: Consumers want more: satisfaction, coverage, and benefits Fewer than half of consumers are satisfied with health plans. Those who feel well-insured are giving ground to those who feel adequately insured or under-insured. Figure 1: Health insurance status, past 12 months* 1 Figure 2: Satisfaction with system elements 2 100% Insured Uninsured Employer-based insurance Government program Direct purchase 6% In 2012, 80 percent of respondents report having some kind of health 47% insurance through a commercial plan or government-sponsored program.* 27% * Quotas were used to ensure that the insurance status and source distributions of our sample match those observed in the U.S. adult population. Please see the methodology section for more information. 80% Most respondents have insurance from employers (47 percent), through government In 2012, 1 in 5 respondents programs (27 percent), report being uninsured or purchased directly and the majority of these (6 percent)*. have been so for at least 12 months. 80% 79% 80% 81% 76% 81% 76% 74% 71% 73% 72% 70% 74% 68% 70% 67% 60% 57% 52% 52% 55% Consumers are less satisfied with health 44% 40% In 2012, fewer than half (44 percent) of plans than they are with primary care consumers are satisfied with health plans. (76 percent satisfied), inpatient hospital care (67 Consumer percent satisfaction satisfied) and with emergency health plans 22% hospital has care declined (55 percent in recent satisfied). years from 52 16% percent in 2009 to 44 percent in Data are rounded Rating of 8, 9, or 10 on a 10-point scale where 10 is completely satisfied Satisfied with outpatient hospital care (% of users) Satisfied with inpatient hospital care (% of users) Satisfied with primary care provider (% of those with a PCP) Satisfied with emergency hospital care (% of users) Satisfied with health plan (% of insured) Satisfied with overall system performance

3 Consumers want more: satisfaction, coverage and benefits A shift from feeling well-insured to feeling either adequately insured or under-insured is evident. Figure 3: Insured consumers ratings of the adequacy of their insurance, % 59% Figure 4: Reasons consumers switched health plans, % Percentage of insured who switched health plans 40% 0 Data are rounded Adequately insured Well-insured Under-insured Not sure 51% 50% 39% 39% 56% Those feeling adequately-insured rose from 51 percent in 2009 to 59 percent in % More enrollees are feeling Those less feeling underinsured health grew between adequately covered by the plans they have than previously: 2011 and 2012 (8 percent to 14 percent). Those feeling well-insured declined from 39 percent in % 9% 8% to 25 percent in % 14% 2% 2% 1% 2% % 17% Increasingly, 2010 consumers are switching 16% plans for cost-related reasons. Among % their reasons is a desire to pay less, get % better value, or reduce out-of-pocket costs; or an inability Also to on afford the rise, premiums. coverage- 60% related reasons for switching insurance include 1 in seeking 6 of the 50% 47% better coverage insured or accessing reports different benefits switching or providers. health 40% 38% plans in % 29% 22% 12% 10% 8% 7% 0 Employment related Cost related Coverage related Service related Other reasons Data are rounded Percentage of insured who switched health plans. Respondents could select more than one item

4 Consumers want more: satisfaction, coverage and benefits In 2012 among those with no coverage, cost was the primary reason for not having insurance (Figure 5). Figure 5: Top three reasons for not having health insurance 5 Health insurance is too expensive I cannot afford to pay for it, or do not want to pay for it I had health insurance through an employer but I no longer work there 61% 26% My current employer does not offer any insurance 19%

5 Consumers want choice and customization when purchasing health insurance Consumers show more interest in actively selecting and purchasing their health care coverage. Younger consumers in particular want to customize their plans with a choice of styles and options. But, consumers are divided about the tradeoffs they are willing to make when that flexibility affects premiums, out-of-pocket costs, and provider access. Figure 6: Current source of insurance 6 Figure 7: Preferred source of insurance 7 6% Only 6 percent currently have insurance that they bought directly; however, 33 percent say they would prefer to obtain insurance that way. 33% 32% 47% 27% 3% 4% Consumers show an interest in alternative ways of obtaining insurance interest is split between a preference for personally shopping 12% for insurance and for taking advantage of employer offerings. 17% Employer-based Government program Uninsured Direct purchase from insurance company or through exchange, connector, or website Select from options offered by an employer Select from options through government programs No opinion/preference Some other approach Do not wish to obtain a health plan under any circumstances Shop on my own (through online sources or exchanges, brokers, or direct contact with insurers)

6 Consumers want choice and customization when purchasing health insurance Consumers show more interest in actively selecting and purchasing their health care coverage. Younger consumers in particular want to customize their plans with a choice of styles and options. But, consumers are divided about the tradeoffs they are willing to make when that flexibility affects premiums, out-of-pocket costs, and provider access. Figure 8: Preferred types of health plans 8 3% 11% 5% 24% 2% 8% 5% 21% 3% 9% 3% 13% 4% Interest in customizing is highest among the 6% youngest generations. 21% 24% 5% 15% 5% Figure 9: Preference to shop on their own for insurance if given the choice 8 Total respondents 33% Uninsured 35% Insured 31% Currently have insurance purchased directly 62% 57% Total Respondents If given the choice, close to 3 in 5 consumers say they would prefer to customize their health plan rather than 64% 62% select from predefined options. Millennials ( ) Gen X ( ) 54% Boomers ( ) Customized plan where you can select benefits and features from a menu of options knowing the cost will reflect what you choose 34% 41% Seniors ( ) Pre-defined plan where benefit, features, and associated costs have been set Some other kind of plan No opinion/preference Do not want a plan under any circumstance Currently have employer-based insurance Currently enrolled in Medicare Currently enrolled in Medicaid Millennials (ages 18-30) Gen X (ages 31-47) Boomers (ages 48-66) Seniors (ages 67+) Men Women Excellent/very good health Good health Fair/poor health 26% 30% 30% 30% 28% 32% 34% 32% 37% 35% 35% 39% Preference to shop on their own for insurance is highest among those who already purchase directly (62 percent); seniors (39 percent); those currently enrolled in Medicare (37 percent); those who say they are in excellent or very good health (35 percent); and the uninsured (35 percent). 0 10% 30% 40% 50% 60% 70%

7 Consumers want choice and customization when purchasing health insurance Consumers show more interest in actively selecting and purchasing their health care coverage. Younger consumers in particular want to customize their plans with a choice of styles and options. But, consumers are divided about the tradeoffs they are willing to make when that flexibility affects premiums, out-of-pocket costs, and provider access. Figure 10: Preferred types of health plans 9 If given the choice, 3 in 5 say they would 36% give up having access to large networks to reduce their premium. Nearly as many report they would prefer to pay more up front in order to have lower 41% out-of-pocket costs at the time of care. 61% 56% 3% 3% Prefer lower cost plan in exchange for smaller network of covered doctors and hospitals Do not wish to obtain health plan under any circumstances Prefer higher cost plan in exchange for larger network of covered doctors and hospitals Prefer to pay a higher price up front (higher premium) and then pay less at the time care is needed (lower deductibles, copays) Do not wish to obtain health plan under any circumstances Prefer to pay a lower price up front (lower premium) and then pay more at time care is needed (higher deductibles, copays)

8 Trusted sources of information Consumers trust independent organizations the most when they seek information to compare insurance benefits and costs. Consumers see variation in cost and quality of plans, and, they re skeptical about health plans objectives. Figure 11: Trusted sources of information 10 Figure 12: Views on health plans 11 Independent companies, organizations, or associations (like e-healthinsurance.com) 27% Prices/fees/premiums charged for a standard plan vary greatly across health insurance companies 70% Employers Consumers trust independent groups and employers more 27% than insurers to provide reliable information about plan benefits and costs. Health insurance companies vary greatly in the quality of coverage and service they provide 66% U.S. Dept. of Health and Human Services State Depts. of Health and Human Services Health insurance companies/health plans 19% 24% 22% Health insurance companies only have profit in mind when they design health plans Health insurance companies seek to provide the best value possible by maximizing benefits and minimizing costs Consumers are skeptical about insurers efforts to design health 66% plans that maximize value for enrollees. 70 percent believe prices, fees, and premiums charged vary greatly between companies and 66 percent believe that quality and service vary between companies. Financial advisors 16% Health insurance companies have health plan enrollees best interests in mind when they design plans 14% Insurance agents/brokers 11% 0 40% 60% 80% Data are rounded Responding Strongly agree or Agree 0 10% 30% 40% Data are rounded Rating of 8, 9 or 10 on a 10-point scale where 10 is completely trust

9 Stakeholder considerations Consumers don t all have the same needs, and many are not satisfied with the traditional choices in health plans. They want more choice and flexibility as they pursue greater health and financial security. As the health care industry and health insurance coverage continue to transform as a result of continued cost pressures, delivery system transformation, and health reform, more and more consumers will be responsible for identifying, comparing, and ultimately selecting their own health care coverage. This shift towards a retail market will encompass individuals in many cohorts: Medicare members (Medicare Advantage and Part D plans), Medicaid members (as states move to Medicaid managed care), the individual exchange markets (starting in October 2013), and the group market (as employers move to defined contribution approaches and public and private health insurance exchanges for employer-provided coverage continue to emerge). To accommodate these shifts, health plans will have to understand and engage with consumers in new ways and meet consumers on their terms. Their customers are ready and willing to participate more actively in their health and their purchase of health insurance, but in many cases they don t feel they have the information they need to do so effectively. For health plans, this will mean that they must help consumers understand and recognize the value they can deliver. They will need better communications and relationships with members so they can help them make more informed decisions. This will be no easy task, because many health plans need to overcome current feelings of consumer dissatisfaction and recast their traditional customer interactions to create a new experience for members. The new way of doing business must be member-centric, and support members through improved access to data and information, better care management programs and tools, and increased support as they navigate a complex and confusing health care system.

10 Stakeholder considerations Among important considerations: 1. How can health plans make the most of the customer experience? There is an unmet need for effective customer service, including the relentless pursuit of quality, patient safety, and care coordination. Plans must take the lead in establishing resources and structures that will provide consumers with advice and information to help them successfully navigate the system and better manage their own health. 2. How best can health plans work with providers and consumers to improve health outcomes and embed value-driven and consumer-oriented systems? They will need new business models that incorporate competencies such as real-time integration of clinical and claims data for better decision-making; payment systems that align with outcomes; a focus on enhanced clinical effectiveness; information and decision-support tools; consumer-oriented information, accountability and incentives that align with care goals; and integration of care pathways and use of tools and technologies such as monitoring devices. 3. A new customer base of individual health insurance purchasers may emerge. This suggests a considerable opportunity to create a transaction-based consumer experience both within traditional health plan organizations and with new market entrants such as Health Insurance Exchanges. Features may range from a bare-minimum retail shopping-type service to a robust, end-to-end consumer experience that takes consumers from shopping to enrolling, with a broad range of product options that vary in price and design as well as a range of value-added services. Consumers are showing more and more interest in using tools like online enrollment, variety in plan designs and choices, and quality and patient satisfaction ratings. They are alert to the purchasing trade-offs it will take to match health care needs with financial affordability.

11 About this research Wellness & healthy living Since 2008, the Deloitte Center for Health Solutions has annually polled a nationally representative sample of the U.S. adult population (up to 4,000 U.S. consumers) about their experiences and attitudes related to six domains. These online surveys have queried adults in varied health status, income, and insurance cohorts to gauge the degree to which individuals are engaging with the health care system as patients or consumers. In 2012, a nationally representative sample of 4,012 U.S. adults, aged 18 and older, was surveyed in February, using a web-based questionnaire. The sampling frame was based upon quotas reflective of the 2010 U.S. Census to provide proportional representation of the nation s adult population with respect to age, gender, race/ethnicity, income, geography, insurance status (insured or uninsured), and primary insurance source (employer, direct purchase, Medicare, Medicaid, and other).* This marks a change from , when fewer quotas were used and supplemented by cell weighting to achieve a representative sample. In those earlier years, the survey results were weighted with respect to basic demographics (age, gender, race/ethnicity, and income), but not additional variables such as insurance status and source. To achieve even closer sample alignment with insurance status and source distributions in the U.S. population, a more extensive set of quotas was used in 2012 and additional weighting was not necessary to achieve a representative sample. Differences reported in insurance status and source between and 2012 are due largely to this adjustment in sampling. The margin of error is +/- 1.6% at the.95 confidence level. The survey consisted of 65 questions addressing specific behaviors Health policy Consumer Survey: six domains of health care Health insurance Alternative health services and attitudes, with 39 potential follow-up questions and an additional 20 questions asking about demographic and healthrelated characteristics. English and Spanish versions were available. Participants were asked about behaviors before attitudes within each topic area to reduce response bias. Information resources Traditional health services * Source: Quotas for insurance status and insurance source distributions were based on KCMU/Urban Institute analysis of the 2011 ASEC Supplement to the CPS, presented in slides published by the Kaiser Family Foundation (

12 Contacts Paul H. Keckley, PhD Executive Director Deloitte Center for Health Solutions Deloitte LLP Sheryl Coughlin, PhD, MHA Head of Research Deloitte Center for Health Solutions Deloitte LLP Deloitte Center for Health Solutions This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this publication. Acknowledgements We would also like to thank Laura Eselius, Leslie Korenda, Elizabeth Stanley, Jennifer Bohn, Katrina Drake Hudson, Claire Boozer, and the many others who contributed to the preparation of this report. To learn more about the Deloitte Center for Health Solutions, its projects and events, please visit Contact Information Deloitte Center for Health Solutions 1001 G Street N.W. Suite 1200 Washington, DC Phone Fax Toll free healthsolutions@deloitte.com Web at About Deloitte Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. Please see for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting. About the Center The Deloitte Center for Health Solutions (DCHS) is the health services research arm of Deloitte LLP. Our goal is to inform all stakeholders in the health care system about emerging trends, challenges and opportunities using rigorous research. Through our research, roundtables and other forms of engagement, we seek to be a trusted source for relevant, timely and reliable insights. To learn more about the DCHS, its research projects and events, please visit: Copyright 2012 Deloitte Development LLC. All rights reserved. Member of Deloitte Touche Tohmatsu Limited