Service experience beats out cost in employer satisfaction with health plans

These days, most employers are paying attention to the affordability (i.e., managing total costs) of their health insurance. However, health insurers that don't offer rock-bottom pricing compared to their competitors still have a chance to hold onto customers by taking some simple steps to boost employer satisfaction, according to the 2010 Employer Health Insurance Plan Study from J.D. Power and Associates.

"The accepted wisdom, even in the insurance business, is that it is all about cost," says Jim Dougherty, director in the Healthcare Practice at the Eden Prairie, Minn.-based firm's U.S. Services and Emerging Industries Division. However, "employee plan services and account services are more important than cost," he suggests.

In fact, cost/cost management ranked last in importance among five core factors that impact employer satisfaction with health plans. From most to least important, those five factors are: employee plan service experience; account servicing; product offering/product design; problem resolution; and cost/cost management, the study found.

"It's not like cost doesn't matter. Clearly it does," stresses Dougherty. Once employers make that decision to shop or switch, "that is when the price comes up to the top," he says. "They're going to do a side-by-side comparison. Then the decision of this carrier over the other often is around price."

However, "the decision to shop in the first place is service-driven. We found that those employers that had lower levels of employee problems had less of a propensity to shop for additional plans, even if the price might be somewhat higher," says Dougherty.

Unfortunately, health insurers aren't exactly acing the test when it comes to employer satisfaction, generating a dismal average overall satisfaction score of 611 on a 1,000-point scale. Further, 79 percent of employers reported that they indeed had experienced a problem or issue that required that they interact with their health insurer.

Improving employer satisfaction with health plans requires more of a mind-set change than huge capital expenditures, advises Dougherty. "The industry is more likely to put out fires than to be working on addressing issues proactively. And we found that those carriers that do address things proactively do better in satisfaction." Many health insurers have made tactical improvements in understanding and providing those services that health plan members want. The next logical step is to incorporate the employer experience into the equation, he says.

J.D. Power identified 15 key performance indicators that help explain why employers are--or are not--satisfied with their health plans, and most of them "are not rocket science," notes Dougherty. However, 35 percent of employers said that their health insurer failed to meet nine or more of the 15 indicators.

Strikingly, employers are much more satisfied with health insurers that communicate with them at least six times a year. However, almost one-half of the employers surveyed did not receive six or more communications from their insurers. And those insurers that did communicate with employers tended to do it by traditional mail (the method employers liked the least). Only 42 percent of employers reported that their health plans make communications available online, says Dougherty.

Employers also want to receive new product recommendations or advice on how to manage costs from their health insurer (or representative). However, "only 48 percent of the time do they report getting that," he says. Insurers should meet with employer customers "at a reasonable time at least two months in advance of the expiration of their contract and give them advice on new products and suggestions," says Dougherty. "Insurers coordinating with brokers to get that done leads to satisfaction." - Caralyn