HelloWallet’s Switch to Consumer-Driven Health Care (Part 1 of 3)


Healthcare can be confusing, anxiety ridden, and, occasionally, emotionally charged.  And I’m just referring to HR departments and their finance counterparts.  For participants, the situation is often worse.  Wrap the large annual premium increases and you have the potential for a truly lose-lose situation for both employees and employers. Given this decade-long dyanamic, late last year, I decided to explore a Consumer Driven Healthcare Plan (CDHP) for HelloWallet employees.  After six months of research and a much greater understanding of the market forces at play, we go live with our full replacement CDHP program on August 1.   Today, I will share some of what led to our decision to change our healthcare strategy and make the switch to invest in our employees through a consumer health plan. 

 I grew up under a “free” healthcare system.   First at home and later in the Navy, choice, cost, and outcomes were not concepts closely associated with healthcare decisions.  However, as a teen I became responsible for my auto insurance, and there learned how accidents and speeding tickets played a role in my money for dates (“discretionary income” in finance speak).  A few years later, I purchased Renters Insurance, and later Homeowners Insurance and Life Insurance.  All of these insurance products were built on the same basic tenets – buy as much or as little as you want, but recognize that your behavior and consumption will have an impact on the cost. 

However, it was not until I joined HelloWallet and became intimately familiar with all of an organization’s costs – each and every bill we pay– that I had the opportunity to examine healthcare as an employer, employee, and, because I previously was an investor and am naturally curious, as an industry.  

To say that healthcare is expensive is a moot point.  Everyone knows that at some level. But cost is not really the issue; it’s more of a “red herring” that masks the more addressable problems. Modern medicine is expensive.  A new MRI machine – $500K; the next blockbuster drug – $5B in research; gene therapy – $50K; weight watchers – $200-400/mos. You should expect the costs of healthcare will continue to grow greater than the rate of inflation, even more so as we are living longer and expect to remain active until our final days. 

For HelloWallet, a startup with mostly young, single knowledge worker employees, the healthcare industry has determined that my labor pool is quite inexpensive to insure (relatively).   The costs are ~$5K an employee.   Note, however, that due to Health Insurance Portability and Accountability (HIPAA) restrictions, I cannot know the quantity of healthcare system products that HelloWallet employees consume each year.  However, from conversations around the water cooler, I know that many of them may visit a doctor once a year for the routine physical or the occasional office visit during flu season, and, perhaps, the dentist every six months for a cleaning.  And then there are some, including one colleague I chatted with today, who had not set foot in a doctor’s office in the past 12 months.  Regrettably, as CFO I lose sight of where exactly this $5K goes after the invoice is paid.

So I must first ask myself first why I am paying $5K a year for a benefit for which many of my employees are using barely a fraction of services, if at all, and second, where the remainder is going. Wherever the excess money is going, it isn’t showing up either in HelloWallet’s bottom line or the paycheck of my employees, and that is a problem I needed to address. 

Continue reading part 2 of 3.