It’s no secret that the private health insurance market is plagued by massive inefficiencies. Every year, most consumers are confused and overwhelmed by health insurance purchasing and can waste thousands of dollars choosing the wrong plan. At the same time, premiums and deductibles are rapidly rising at a rate that well outpaces annual wage growth.

Opaque pricing models have forced employers and consumers to accept these inefficiencies. Now, Amazon Care is poised to upend this unsatisfactory status quo—pushing health benefits advisors and carriers to consider ways to bolster their competitive advantage.

Currently, Amazon Care provides Washington state-based Amazon employees access to medical care via telehealth and in-person home visits. In summer 2021, Amazon Care will roll out to all Amazon employees across the country as well as other Washington-based companies. This first expansion is very likely just the beginning of Amazon’s move into the healthcare space. And since Amazon Care is contracting directly with employers, they’re setting themselves up as a viable alternative to large health insurance providers, and potentially circumventing their brokers entirely.

Whatever the tech giant’s next move, there’s no question that it will disrupt the private health insurance market.

“Our health system is incredibly fragmented, which results in massive cost inefficiencies and individuals left largely on their own,” says MyHealthMath President and Chief Mission Officer Dr. Elizabeth Cote, MD, MPA. “Through conglomeration, Amazon is uniquely capable to solve this chaos and gain efficiencies, giving individuals what they crave—a coordinated, predictable, understandable, and comfortable healthcare experience.”

In the coming months, health carriers and benefits advisors will brace for impact, looking for ways to enhance their solutions in the face of the behemoth. Solving for inefficiencies stemming from costly confusion should be central to those efforts.

Two opportunities to course-correct

Make choosing a cost-effective health plan easy (and personal)

“Among our clients, we’ve found that 50 to 60 percent of consumers waste over $1,300 a year overbuying health insurance. If other players in the market don’t correct these inefficiencies, Amazon will,” says MyHealthMath Founder and CEO Bob Watterson. “Slicing inefficiencies is what they’ve done again and again in other markets. It won’t be any different here.”

Employees choose the wrong health plan because it’s too hard to do the math and figure out the most cost-effective option. Individuals have very little transparency about how much their healthcare will cost them, so they often choose a low deductible plan with higher premiums—a more expensive option that feels safer. This results in employers and employees wasting millions annually overpaying on premiums. Robust decision support tools can slash that waste by doing the math for employees and empowering them to choose a plan that will save them money.

Importantly, these tools need to be personalized to be effective. Tools that calculate the best plan based on limited information (e.g., only a few personal data points) or don’t factor in employer-specific plan information (e.g., employer HSA contributions) risk inaccuracies and continued inertia. Without personalization, employees are also less likely to trust these recommendations, and therefore less likely to change behavior.

Amazon Care, with its unlimited data reach and focus on data-driven personalization, foreshadows the exchange of “check-the-box” health plan decision support tools for more robust, trustworthy alternatives.

Importantly, personalized decision support can also help brokers and carriers preserve a unique human touch. At MyHealthMath, our live analysts are available to speak with every employee, offering support and guidance. This degree of personal support with a human-touch is likely something Amazon will struggle to capture.

Mine efficiencies in plan design

Consumer confusion is one source of inefficiencies. Plan design is another. Brokers help employers design plans that fit their employee population’s needs, but it’s difficult to know which health plan is most cost-effective for each employee and impossible to know which health plan each employee will choose. So, employers end up testing different strategies, like introducing a new plan or increasing their HSA contributions, and hoping these changes help employees choose a better plan and save.

This kind of guesswork translates to cost inefficiencies for the employer and their employees—inefficiencies that Amazon Care is sure to target.

MyHealthMath’s benefits optimization system is built to mine these inefficiencies. It uses claims data to help employers and their benefit partners:

  • See the best plans for employees based on their actual usage.
  • Adjust plan design to predict savings based on enrollment and costs.
  • Compare plan scenarios to set the best pricing and capture the most savings.

If brokers and health carriers can help employers capture win-wins with employer and employee savings, they’ll have a major value-add when Amazon Care comes knocking.

“Amazon’s growth in just the past year has been meteoric,” says Cote. “The question isn’t whether they’re coming for the private health insurance market; it’s whether and which stakeholders will be ready to withstand the changes Amazon will bring.”

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