Paying more for the amenities you may never need

Let's continue our discussion about the future of employer-based insurance products in the US. We have talked about a general shift of employer-based plans to insurance exchanges and Medicaid; about a shift of retiree health benefits away from employer-based plans; and a move to reallocate risk away from insurance companies and towards doctors and consumers. What's left?

Well, as the commercial insurance pool shrinks and as subsidies for government-chartered or government-paid insurance products diminish, the norm for the general public will be a "dumbed down," lowest common denominator kind of insurance. With accountable care organizations and a move to bundled or capitated payments, limited networks will come into play. Deductibles and co-pays will rise to discourage people from using health care services. Likewise, if you choose to go out of network for your care, you will see higher personal charges.

But the potential for market segmentation never disappears. What will you do if you are an employer who wants to retain an insurance plan to attract workers in competitive fields? The answer may be to provide your staff with a "privileged access product," something that we have seen in Europe. (There, government-sponsored insurance can leave out a lot of items that are routine in the US, and rationing by congestion of high-end services is more commonplace.) The idea of this kind of privileged access product is to address the insecurities that people of means may have about the new environment. They want to assure themselves rapid access to the services they want, including the latest technological advances. They also want extra amenities like private rooms and other concierge type services.

It is a recognized phenomenon that people, especially people of means, are willing to pay more for amenities they may never need. So, look for such high-end specialized product offerings, especially in companies where well-paid workers in demand by competing firms represent a significant share of the workforce.

So, when you put this all together, we will likely see a move towards a more egalitarian (government provided or government-influenced) offering of insurance products for the majority of the workforce, combined with a less egalitarian offering of premium services for those with higher incomes. As I suggested years ago and reiterated last year, expect a convergence of the US and European models:

I predict . . . that the systems will start to look more and more alike over time. Pressure in the US for a more nationally-determined approach. Pressure in Europe for more of a private market approach. It shouldn't surprise us to see this convergence. After all, the countries are dealing with the same organisms, both biologically and politically.