by Jeff Bakke
Are you familiar with Sudden Health Expense Anxiety Syndrome (“SHEA Syndrome”)? Unless you attended Partner Conference, where I spoke about it alongside Chris Byrd, the Center for Financial Services Innovation (CFSI) and Gartner Group, you likely haven’t heard of it. That’s because I made the name up, and I apologize to you and everyone in the health and wellbeing industry for the lousy acronym.
Despite the acronym, this is a real problem. I am sure that you’re already familiar with the syndrome. SHEA has everything to do with how Americans’ declining financial health is impacting their actual health. It’s enough to make them sick: One worker study found that employees with high financial stress are twice as likely to report poor health overall and are more than four times as likely to suffer from fatigue, headache, depression or other ailments.
SHEA Syndrome has grown into an epidemic, and escalating out-of-pocket maximums and healthcare deductibles are one of the prime culprits, having risen quickly from a few hundred bucks on average less than a decade ago to around $1,500 today—even more than that if you work for a small employer. That’s meaningful in a country where more than half of people have less than $1,000 stashed in a savings account. Consider that there are now just as many people who lie awake at night worrying about the cost of a future healthcare expense ruining them (“I have a $1,500 deductible, but only $300 in the bank”) as there are those who are worried about a future healthcare event impacting their wellbeing (“I hope I don’t get cancer”). That’s truly astounding.
Fear of medical bankruptcy is starting to have a real impact on Americans’ psyche. Nearly one in three workers reports that financial stress has been a distraction at work. This, of course, leads to lost productivity, absenteeism and the rise of something called “presenteeism,” whereby an employee is physically present but is performing suboptimally because of stress, illness or both. Unsurprisingly, out-of-pocket expenses hit low-to-moderate income households hardest, but even high-income workers report significant financial health struggles.
Consumer-driven healthcare: A cure for consumers’ ailing financial health?
According to CFSI, “Employers who address the financial health of their workforce can see stronger business results through higher productivity, increased employee loyalty and an improved reputation.”
One of the products that’s proven to be an antidote for SHEAS is the consumer-driven healthcare (CDH) account, which allows consumers to set aside money at each pay period, earmarking it explicitly for healthcare expenses. Though health savings accounts (HSAs) are talked about most often in the market today and are the best long-term healthcare savings vehicle, there are actually more FSA account holders in the U.S. Both types of accounts are important and interesting, and both are excellent at helping Americans brace for a financial shock related to medical bills.
CDH accounts benefit all stakeholders—employees, employers and providers
The benefits of CDH accounts extend to all stakeholders. For employers, who have struggled to create a stronger level of personal responsibility for their workers’ health while they also try to help them deal with rising deductibles and other financial stress, CDH accounts allow them to present a solution that will both give their employees more skin in the game for their physical health and financial health, as well as provide a retirement savings vehicle that includes all the positives of a 401k plan plus the option to take tax-free withdrawals at any time for healthcare expenses. And, by reducing employees’ financial stress, employers get more productive, focused employees.
For the providers, which were once paid primarily by third parties and are now paid—or in many cases, not paid—directly by consumers, CDH accounts are helping solve the massive medical debt problem. The solution they offer up is ideal: a debit card that the consumer hands to a provider on the spot so that the provider is paid instantly instead of many months later or not at all. With the WEX Health Cloud platform, consumers can log in, click a button and pay providers right out of their CDH account.
The biggest barriers to CDH account adoption? Education and resistance to change.
No one has ever said that selecting health and financial benefits was fun. When it comes time for benefits enrollment, consumers are oftentimes not doing the work to review their healthcare and financial options, and are likely to pick whatever plan they had last year or the plan that’s cheapest. This plan usually has the highest deductible. Rather than thinking about their risk over time and setting aside the savings in a healthcare account, they’re setting themselves up for failure by thinking about having another $100 left in their paycheck at the end of the month versus $1,200 at the end of the year that would create a buffer for medical expenses. This behavior can quickly develop into SHEA Syndrome.
To encourage more opt-in thinking versus opt-out thinking and actually reduce financial stress, the CFSI says that employers’ financial education efforts need to be coupled with products and services that encourage behavior change and help employees better plan, save, spend and borrow to optimize their physical and financial health.
The WEX Health Cloud platform is unique to other solutions in the marketplace in that we power HSAs, FSAs, health reimbursement arrangements (HRAs) and other tax-advantaged benefit accounts well whereas our competitors generally excel at only one. Another differentiator: We distribute through health plans, third-party administrators and banks, which know precisely how to pair CDH accounts to health plans to put all stakeholders in the best possible position for achieving financial health. Learn more about the WEX Health Cloud platform.