Photo from Getty Images for CNBC

According to this CNBC article posted below and linked here (Here’s how much the average American spends on healthcare), the “average” American spent $9,595 in 2012. “Average” is a tricky term and worthy of a precise discussion here.

Consider a recent study by a well known actuarial firm, which investigated the problems with “average” as a measure for health care consumption and costs for working Americans. This study was commissioned by Hixme, (a high tech disruptive alternative to traditional benefits for large employers).  The study finds healthcare consumption for these working Americans in 2015 was $455 per month, or $5,460 per year, far less than the “average” stated in this article for all Americans, working, non-working, young and old (the first problem with the term “average”).

But looking deeper into the $455 “average” for these working Americans reveals that “average” is misleading as well:

  • 10% consumed nearly $3,000 per month
  • 15% consumed about $522 per month
  • 25% consumed only $165 per month
  • 50% consumed a mere $26 per month

For barely over 10% of this working population, healthcare consumption was HIGHER than what their “average” employer coverage provides (and what they increasingly pay for through payroll deductions).  Still, it was a good deal for this very small portion of the workforce.

But for the vast majority of their co-workers, (over 85% of this working population), personal health care consumption was FAR BELOW what their “average” employer coverage provides (and what they are increasingly paying for through payroll deductions).

Forcing 85%  into “average” but too expensive coverage that they don’t actually need is silly and expensive. Forcing 15% into an “average” coverage that is inadequate, but affordable, does’t work either. Forcing every member of a family into the same “average” coverage regardless of the varying needs only compounds this. Yet that is exactly what today’s traditional and outdated employer benefits models do.

Executives responsible for Total Rewards, Benefits, and other Human Capital considerations wonder why worker satisfaction with benefits is declining rapidly in America. Many believe it suggests employers should INCREASE levels and cost of coverage. But at the same time they are forced to impose increasingly intrusive personal health cost management programs on workers. And their workers are increasingly forced to pay more of the price of their employer’s choice through payroll deductions.

In reality a very different solution is needed, one that provides a vast array of personal coverage options that match the perceived needs for each member of the family. Some workers and/or family members who accurately self assess high health care needs for the coming year, need access to higher coverage to match, even if they have to pay more for it. But most workers, who accurately self assess minimal or no health care needs in the entire year, will want to trade unnecessary coverages for more cash in the paycheck. It works like this:

  • Healthcare needs are very unique and personal
  • Very few people need very much healthcare – and generally know it
  • Most people need very little healthcare – and generally know it

Pretty simple for a savvy American consumer to understand — perhaps its time for American companies to get it too?

At Hixme, we think so, and have created a great alternative with a high tech WorkPlace Market platform that allows workers to access a broad Direct-to-Consumer market to right-fit coverage while still allowing employer sponsorship.

 

 

 

CNBC article link: Here’s how much the average American spends on health care