Are Alternative Health Plans the Future?

As we approach the next U.S. presidential election, questions around how Americans will receive and afford their health insurance appear likely to be among the top domestic policy issues in our country.

The challenges facing the healthcare industry today are both the same and different from those of past years. Healthcare inflation continues to worsen, and our industry has been labeled among the most complex that Americans must interact with. None of this is new.

However, we face an affordability crisis that is unlike anything this country has ever experienced. Economic inflation has strained the family household budget. Revolving credit card debt just crossed the trillion-dollar level in the United States for the first time (up by $250 billion in the last 24 months). Families do not have the financial means to afford the high out-of-pocket costs within their medical plans and they no longer have lines of credit to support them through an unexpected healthcare event.

AHPs Reminiscent of HDHPs of 2000s

In contrast to the last presidential election cycle, we have new for-profit insurance startups that hope to be the answer to spiraling healthcare costs that our country is seeking, in lieu of governmental reform. Plan sponsors are aggressively exploring alternative health plans (AHPs) that promise to address cost and complexity with savings and simplicity.

Traditionally, healthcare startups enter the market as disruptors to the existing offerings from major health insurers Blue Cross Blue Shield, UnitedHealthcare, Cigna, and Aetna (collectively, BUCA). But we have moved from a wave of disruptors to enablers—AHPs today are either BUCA-owned or partnered strategically with one of those companies to bring forward these new, simplified, and better-performing insurance models.

This is reminiscent of the early 2000s when insurers like Definity and Lumenos introduced high-deductible health plans (HDHPs) to the industry, offering consumers lower premiums offset by higher deductibles. The moment those startups were acquired by the BUCAs, HDHP participation in commercial plans skyrocketed to a 30% market share. While HDHP plans provided greater tax efficiency, they did little to slow the overall inflation rates in healthcare, forcing employers to seek new options.

History is repeating itself now: Organizations like Blue Cross Blue Shield, Aetna, and UnitedHealthcare have recently acquired or partnered with some of the largest AHPs in the industry. (Full disclosure: I am the co-founder of Coupe Health, an AHP).

What is an Alternative Health Plan?

Alternative plans are true replacements to traditional preferred provider organization (PPO) and HDHP health insurance options. These AHPs provide simpler insurance plan designs that improve the member experience and reduce overall healthcare costs by motivating individuals to choose higher-value, more efficient providers in the network. As Coupe Health medical director Dr. Eric Bricker pointed out in a 2022 paper, “Higher quality doctors can lower healthcare costs by lowering the number of units of healthcare”—such as surgeries or MRIs—required by patients.

Unlike point solutions or navigation programs, individuals must elect and enroll in these new plan offerings.

While many AHPs tend to look the same on the surface, investigating them further reveals marked differences important for benefit design consideration.

1. Quality and Network Optimization. Most AHP models measure provider quality to steer patients toward higher-value care. Better value does not always mean lower unit cost. Providers that deliver care more efficiently with fewer complications, readmissions, and “never events” may be more expensive on reimbursement rates, but generate lower overall healthcare spend. Many AHPs try to optimize broad national networks to offer patients a wide variety of providers and facilities. Measurements are generally at the individual doctor and clinical service line level, not at the group tax ID or system level. This is a major evolution from traditional high-performing network models of the past.

2. Financing Support. Some of these models include financial support for plan participants, allowing them to pay their out-of-pocket costs over time without resorting to high interest rate financing or avoiding needed healthcare for their families. These capabilities help to solve the affordability crisis by bringing forward new financial well-being benefits that are automatically included within their health plan.

3. Plan Design. Similar to the introduction of HDHPs in the early 2000s, AHPs introduce new, simplified plan design and payment models. Some of the plans are available on a non-qualified first-dollar basis only, while others offer both a qualified health savings account-eligible and non-qualified option.

4. New Clinical Navigation. Some AHPs include new clinical navigation capabilities within their models, helping to move beyond traditional medical management strategies. The goal of these models is to connect individuals with top-quality providers before they establish a relationship with a specialist. Compared to traditional strategies, this early identification and navigation has helped to reduce the overall cost of complex care by directing individuals to more efficient, better value providers, who also have admitting privileges to top-quality hospitals.

5. Concierge and/or App-Focused Experience. It’s important to distinguish between AHP models that are human-first models and are integrated with a concierge versus AHP models that are primarily app- and technology-focused. Some AHPs may blend both.

What is the Future of AHPs?

We believe the future of AHPs will follow one of two scenarios, with the second being more likely:

1. Employers will exercise their ability to exit the employer-sponsored system leveraging available legislative paths (such as individuals coverage health reimbursement arrangements, or ICHRAs) or through new lobbying efforts that expand public options.
2. Alternative models will deliver on their promise to transform the industry and meaningfully impact the country’s affordability challenges. By doing so, we believe employers will continue to provide employer-sponsored coverage versus using an exit strategy available under an individual coverage approach.

Early adoption results are promising. Employers using Coupe Health have reduced their claim cost by 12% on average. Providers have reduced their administrative burden for billing, collection, and bad debt, allowing them to focus on high-quality care. And, most importantly, we have improved the patient experience, with net promoter scores of 92% while delivering better clinical outcomes and lower out-of-pocket costs.

Our industry is in an ideal position to introduce these new models. It is imperative that advisors and industry leaders bring forward new, innovative solutions to connect individuals with the highest-quality providers and the best programs. This is the mission of many AHPs, and we look forward to a better tomorrow.