The Affordable Care Act has changed the game for healthcare organizations and, in the process, created a new dynamic for marketing professionals and administrators. This is not dissimilar from what the financial services industry experienced 35 years ago with the introduction of the 401k. Both events are seen as democratizing their respective industries and giving individual consumers greater control over very personal decisions impacting their life and livelihood long into the future.
The 401k was not intended to replace defined benefit plans and become the de facto retirement program in corporate America. Leveraging a relatively obscure paragraph in the Revenue Act of 1978, benefit consultant Ted Benna crafted a program where employees could get a tax break for deferring a portion of their salary for retirement. He suggested his clients incentivize participation by matching a portion of the deferral. The concept was simple: get paid more and get a tax break if you set some of your paycheck aside for retirement.
In the early ’80s, the 401k took off. First, with large companies who used it as an alternative to costly DB plans. And eventually with smaller companies who weren’t able to offer employees a retirement benefit until the 401k came along.
Thirty-five years later, the jury is still out on the impact of the 401k. Many experts, including Benna himself, feel the 401k has become complex, leaving many people too intimidated to participate; and those who do have so much freedom and choice, they often make poor investment decisions.
So what has the history of the 401k taught us, and how can it be applied to these early years of the ACA?
Simplicity Translates into Action The 401k was originally intended to only offer two investment choices, a guaranteed fund and an equity fund. As sophisticated investors pushed for more options, the general population was overwhelmed and negatively impacted.
The healthcare ecosystem is complex and confusing. With varying levels of decision-making experience across the general population, segmentation can be used to group and target consumers based on their information needs. Communications can then be tailored so those who are best served with only basic information are not intimidated or overwhelmed by the complexity and detail others are seeking.
Education Alone Doesn’t Work Despite the hundreds of millions of dollars employers and investment companies spend on educational 401k materials, it doesn’t stop participants from making costly, sometimes catastrophic decisions.
Many people are unqualified to make the healthcare-related decisions being asked of them, particularly those with HSAs and other high deductible plans who may have never shopped for healthcare services before. Education alone isn’t enough. Tools and engagement programs are needed to guide consumers through the process, thereby helping them make smart decisions and increase the likelihood of positive outcomes.
Brand Influences Choice According to a recent study by Cogent Research, the best-known and most-popular 401k providers like Fidelity, Vanguard, and Schwab are not rated highest for service and support by plan sponsors, but their brand recognition and brand preference remains at the top of the charts.
In the absence of complete information, and the inability to access more information in real time, consumers rely on brand reputation when making important decisions. This is particularly relevant when those decisions are involving something as critical as their health. Invest in keeping your brand top of mind with consumers so they always think of you first.
As healthcare marketers, we are challenged with complex issues and play vital roles in the lives of millions. We help people make some of the most important decisions in their lives. Consumers need communications that are informative, clear, credible and human, not glib or flashy, to help them achieve better outcomes at work and in life. This is how we can ensure that the same questions being asked of the 401k today aren’t asked of the ACA in the future.