Thoughts from the Road

Dress Shirts = Health Insurance?

We’re in an odd industry. With the notable exception of higher education (which really needs a shakeout), what other industry thinks that an annual inflation rate of 6.5% is low? After all, it’s only 3.5 times CPI growth(!). Annual premiums for employer-sponsored family health coverage passed $20k this year, and only 39% of Americans say they have enough savings to cover a $1,000 emergency room visit.

It hits all of our wallets. But to many Americans, it means going without health insurance—the number of uninsured climbed to 27.5M in 2018. And even more people have plans that don’t really help them very much. Between the high out of pocket costs and benefits that aren’t always meaningful to the member, it’s not a great value.

I’m reminded of buying dress shirts. It’s an obvious analogy, right? I’m a weird fit—bigger chest and neck, stumpy arms, and despite my worrying Oreo habit, a somewhat smaller waist. So, if I buy a traditional shirt that fits my neck enough to avoid choking with a tie, it looks like a caftan. I just dealt with it until a friend suggested Proper Cloth. They have a great system that allows people like me to create made-to-measure shirts that not only fit well and look good, they’re actually super comfortable and comparable to store prices. I don’t mind wearing ties now. Actually, that’s not true, but close!

This company was bold in rethinking traditional manufacturing. They replaced an analog process that mass produced a one-size-fits-all product with a digital one that quickly incorporates production tools and consumer preferences to deliver a completely customized offering. And it works really well.

How does this apply to the health insurance industry? In short, all we need is the ability to: 1) show members how to customize their own plan; 2) provide a really good guesstimate of how much they will spend out of pocket with that plan; and 3) get regulatory approval to market custom plans to individuals in each of the 50 states.

Obviously, it’s not happening at that level anytime soon. But it can happen initially for groups. We can provide the right infrastructure to offer choices that are flexible and easily understood. Maybe customized benefit plans won’t fix the entire healthcare system (and custom-made shirts don’t mean I’ll actually look good), but it is a good start to address affordability and help ensure sustainable health insurance pricing.

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