As I mentioned a few posts ago, we are opening this space up to some guest contributors, other experts in our beloved HR Technology industry. Today I would like to present to you a post written by Rae Shanahan, EVP of Engagement & Excellence at Businessolver. Businessolver is a provider of benefits SaaS technology. Businessolver was founded by HR professionals in 1998 and is headquartered in West Des Moines, Iowa.
When you think about some of the most brilliant minds of recent history you realize that they share one characteristic: the ability to see things differently. Breakthroughs like the Theory of Relativity wouldn’t be uncovered had Albert Einstein not looked at complex mathematical problems differently. Apple, Inc. would not be worth more than $600 billion had Steve Jobs and Steve Wozniak not looked at personal computing differently. So how can we apply the ability to see things differently to the world of benefits?
To start, we have to challenge mainstream assertions and use data rather than emotion as a guide. Then look differently at common benefits-related challenges. Here’s what you may realize:
- People don’t like to shop for employee benefits, and especially not for health insurance.
- Too much choice – like the trend toward offering a plethora of health plan options to employees – causes buyer paralysis and confusion.
- Purchasing insurance is what academics call an irrational buying decision, which traditional benefits enrollment systems don’t acknowledge.
- Today’s multigenerational workforce — a rapidly increasing number of whom are highly mobile and thrive on social media — demands different approaches for different segments when it comes to benefits enrollment.
Consumer Shopping Behavior Does Not Apply to Insurance
Let’s paint a picture of the health insurance consumer landscape: As of 2009 more than 140 million Americans had control of their health insurance choices (a.k.a., consumers) which totaled $785 billion in premiums. That’s a lot of dough being spent at a consumer level. But according to research by McKinsey & Company, most of those consumers who actively “shopped” for health insurance were unable to revisit their current insurance status. In other words, they don’t know what they bought. Why? Research shows that an insurance purchase, especially health insurance, isn’t made with the same consumer rationale as products like electronics, cars or vacations. Approximately 86 percent of employees find the insurance purchase process confusing. According to MetLife’s 12th Annual US Employee Benefit Trends Survey, “…increased choice means employees need additional help navigating unfamiliar options.” Also, 38 percent of employees report they are not very confident that they made the right decisions during their last annual enrollment, and 42 percent do not believe they use them effectively.
The Paradox of Choice
Swathmore psychology professor Barry Schwartz made the term “paradox of choice” ubiquitous when he authored, “The Paradox of Choice” in 2004. At the core of Schwartz’s assertion is too much choice, whether it is something mundane or profoundly important, can have a negative impact on the decision-making process. Yet the central premise behind insurance exchanges is offering a wide variety of choice. If we pay attention to lessons from retirement, we should be careful. Consider this fact presented by social psychologist Sheena Iyengar in her TED Talk: When a retirement plan offered two fund options, participation was in the mid 70th percentile. And for the plans with 50 fund choices, participation rates drop to the 60th percentile.
Source: TED Talk, Sheena Iyengar
Worse, those plans with more choices available also made consumers more likely to put all of their money in pure money market accounts. Her assertion is that choice overload reduces decision quality as well as satisfaction.
How Do We Fix Irrational Buying Behavior?
McKinsey & Company retail health consumer surveys show that the most important driver for health insurance satisfaction is peace of mind, with 32 percent of consumers responding. The responses, “provides me with the coverage I expected” and “offers a plan that meets my needs” followed at 18 and 14 percent, respectively. When peace of mind outweighs finding a plan that fits your needs or provides the coverage you expected, it’s clear that we’re dealing with an emotional element.
Addressing Dynamic Employee Demographics with Targeted Focus
It’s not unlikely that you have four distinctly different generations on your payroll. You also likely have influences of gender-based, socio-economic, racial, geographical, and psychological components – not to mention the technological gap – to contend with. Furthermore, Pew Research Center research shows a dramatic trend of increased social media use by every adult generation. Even the demographic aged 65 or older has 43 percent actively using social media. All of these factors highlight the engagement challenges and need for individually focused communication to ensure health insurance choices and utilization are maximized.
What should we do now? There’s no magic bullet for engagement, but awareness of the challenges is key to developing a plan that fits each specific employee group uniquely. If we know the potential roadblocks, it’s easier to navigate to the final destination.
I’d like to thank Businessolver for contributing this week’s post. There was some great data in there! I’m curious as to how the data stacks up against what you all are seeing personally or within your companies? Share with us by commenting below or tweeting at me (@HRTechKaiser)!