Anyone who watches a lot of TV has likely seen Flo, the energetic Progressive Insurance spokeswoman.  Flo spends a lot of time advertising Progressive’s “Name Your Price” tool which allows consumers to (right upfront) enter on a website what they are prepared to pay for insurance and to then select from a range of options at that price.

Using the tool, consumers can use sliders to change their coverage options, seeing the effect of adding and reducing coverage on price.  They make trade-offs, say reducing some benefits in exchange for others or to get lower prices.

I’ve been giving this tool a lot of thought, and think that there are some important lessons for healthcare.  Name Your Price (NYP) is a disarmingly simple yet powerful way of empowering consumers to make better insurance purchasing decisions.  NYP is, after all, a simple marketing tool (the product and rates are the same as traditional insurance shopping).   The difference with NYP is that it inverts the buying process and makes consumers rate various tradeoffs up front.

I think that NYP would be an important change to how we sell healthcare insurance.   Beginning the healthcare discussion with an understanding of what patients are able to pay, and then tailoring the offering seems to be a better and more respectful strategy than putting together a product and then telling consumers what it costs.

flo

An analogy I’ve used is that health insurance can often seem like the cable company: you can pick from four cable packages, but each package comes with the four channels you want and fifty more that you don’t need.  In other words, bundling benefits is inefficient from the consumer’s perspective. You are paying much more than you should for the few benefits you value– while also getting a range of benefits you don’t care about while potentially not getting the few others you want. It’s one reason why cable consumers are migrating to Netflix and other a la carte offerings.

We’re in an interesting time in US healthcare. Companies are increasing moving to defined contribution plans for their employees and we are seeing a lot of shopping on private and public healthcare exchanges.  Consumers are also increasingly recognizing that unlimited access to unlimited networks of providers and hospitals simply, with no copay, isn’t affordable.  Today, the tradeoffs are often not transparent to the buyer and there are a lot of hurt feelings when the copay is due, or a hospital is out of network.

You can imagine a different buying experiencea Name Your Price tool that begins with the budget a buyer can afford (perhaps only the dollars an employer has allocated for healthcare coverage).  An online tool would allow consumers to adjust the copays, deductibles, pharmaceutical formulary and access to various networks/ high-priced centers to arrive at a customized policy that reflects the optimum utility to the consumer.  Don’t want to go to the fancy teaching hospital across the state? Adjust the slider to a reflect narrower network.  In exchange, you’ll have better access to medications and lower copays at the PCP.  Up front, consumers make the trade-offs that make sense to them.  Here’s my mockup of what this might look like, but many more variables could be included too… 

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I’m not an actuary, and I’m not sure whether the insurance industry can handle this degree of variability as it forecasts utilization.  But, my bet is that when you engage consumers early in the process, they’ll make smarter insurance purchases that reflect their needs– and they’ll suffer less buyer’s remorse when it actually comes time to use the coverage.