A Striking Memory
A few years ago, my colleagues and I were watching a focus group of seniors talk about their health insurance. The discussion was compelling, and we leaned toward the glass as people described their experiences, fears, suspicions, and rationales. It was already a lively discussion, so we were surprised when dental benefits came up and, all at once, everyone was sitting up straighter, beckoning to the moderator to call on them next.
Confirmed by Research
Over the course of many years of research on Medicare and under 65 populations, we have observed that dissatisfaction with dental benefits is the most frequently cited reason for consumers to shop for a different health plan. For example, in each year between 2016 and 2019, approximately 25% of seniors indicated that their dental benefit did not meet their needs and was a top motivator for seeking an alternative health insurer.
The Market for Dental Benefit Plans
Dental coverage is not regulated as is medical coverage, consequently insurance companies are not required to provide a minimum benefit. Dental plans tend to be highly constrained with most limiting total annual coverage to less than $1,500. This means that if a patient undergoes a serious procedure, they will likely be saddled with a hefty bill. Many consumers are not willing or able to pay high out of pocket expenses, leading them to live with untreated problems. Deft’s 2018 Medicare Member Experience study found evidence of this: 9% of seniors were living with dental pain and 19% had trouble eating because of a dental issue. Knowing that untreated dental problems abound, insurance plans are loath to enrich their benefits and attract a high-claims population. (see Medicare Member Experience and Engagement Study, Deft Research, 2018)
Millions of consumers are not happy with their dental benefits, this spurs them to shop for alternatives, but when they do, they find a market of unsatisfactory choices. For this reason, dental benefit dissatisfaction has not been a top concern of member retention or loyalty managers at health plans. Dental benefits may consistently disappoint, but not many consumers can find anything better. The disappointment doesn’t lead to disenrollment.
Will Competition Lead to Better Dental?
For Medicare Advantage and other insurers, addressing the unmet dental needs of consumers falls within both the mission and the business requirements. In many markets, competition for individually insured seniors and under 65 consumers is fierce. Dental benefits could be a way to unlock the consumer value needed to attract a larger market share.
United Healthcare, Aetna, Humana and others are hammering the competition with low and $0 premium Medicare Advantage plans. Any plan interested in being more attractive than the standards set by these titans may need to look at dental. According to our research, a superior dental offering would draw the interest of 25% of Medicare Advantage members and 40% of Medsupp beneficiaries. (see Medicare Member Experience and Engagement Study, Deft Research, 2019).
In the Medicare dental market, the preferred means of offering dental is to embed it in the health plan. Few Medicare health plans add a noticeable dollar amount to premium for these embedded dental benefits. In other words, the benefits are serving as “table-stakes”: the minimum offer required in order to make the overall health plan a credible choice for most consumers. Health plans are not delivering, and possibly not attempting to deliver, consumer value deemed by consumers as worth paying more for.
A quick review of dental benefits shows where the opportunities may lie. First, we note that when a dental benefit is offered as a “rider” (an add-on) and has its own premium, the average is around $24, but can be as low as $3 or as high as $39. For this attribute, the high value is more than 10 times the low. This indicates that dental insurance providers have determined that a market exists for both lean and richer benefits. The tactic most Medicare Advantage and other insurers employ of offering a one-size-fits-all dental benefit may be missing an area where value could be added.
Wide ranges characterize the dental benefit market. Annual limitations range from $250 to more than $2,000. And out-of-pocket charges for specialists or advanced care can be as low as $0 or as high as $500. If we zero in on a single procedure, we see that out of pocket charges for a crown range from $295 to $500 or from 30% to 70% coverage.
The variability of prices and out of pocket expenses exposes an opportunity. The variation is a characteristic of a market in which decisions are driven by closed internal processes. We think it indicates that these decisions lack understanding of the willingness to pay of consumers. Dental plans may know the demand for services but have less complete understanding of price sensitivity. Unlike medical treatment, dental care is easier to defer or do without, and so price sensitivity for dental services is a much more potent factor than it is for many medical services. Without both demand and price sensitivity, the uncertainty and risk of offering an enhanced dental benefit has rendered the decision impossible to make.
Deft’s Research Response
Deft Research has developed a research approach to help health insurers interested in developing a sustainable dental benefit that increases the attractiveness of plans. The approach uses conjoint analysis to do a deep dive into dental benefits. With conjoint analysis the interaction between demand and price sensitivity can be measured – the research can ascertain consumer need and willingness to pay for services. We propose that services that are representative of a category become the dental benefit attributes to be studied in the research, categories being: restorative, periodontal, dentures, implants, bridges, oral surgery and other. The research would show, how changes in cost-sharing would alter the volume and type of consumer drawn to the benefit. With this, the uncertainty and risk of an enhanced benefit, or of offering a suite of lean to rich benefits, would be reduced, setting the stage for a bolder decision.
National and Local Studies
When thinking about the entire health insurance package, dental benefits are just piece of consumer consideration. To address this, Deft’s research approach achieves efficiency with a National Dental Benefits Study and customization with local market research. Both national and local market studies equip clients with a market simulator that enables an unlimited number of product tests and inquiries.
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