Unlocking the Power of Generative AI in Healthcare Benefits Design

In the article "Use Experimentation to Design Better Health Care Benefits," Lisa Woods and Owen Tripp highlight U.S. employers' growing challenges in designing effective healthcare benefits. Rising healthcare costs, widespread employee health risks like burnout and obesity, and the need for innovation in benefit design are among the primary concerns. The authors argue that a data-driven, test-and-learn approach, commonly used in product development, can help optimize healthcare benefits.

While I agree with the article's premise, employers can do more with research to manage healthcare costs better and gain insights into their core business. Any organization’s most valuable asset is its employees. Especially now, with powerful tools like generative AI, employers can synthesize vast amounts of data and insights to drive effective decision-making. Understanding employee behavior and preferences has long been overlooked, yet it holds the key to managing costs and improving employee satisfaction.

Of course, employer/employee privacy issues can pose a challenge. Many companies prefer to leave healthcare benefits design to a small group of HR managers or outsource it to external vendors. However, with increasing business expenses caused by rising healthcare costs, it's time to think beyond traditional approaches. We need to leverage data from our workforce to not only manage costs but also drive new business insights.

The challenge is real. According to a Reuters report from September 12, 2024, U.S. employers expect health insurance costs to rise by an average of 5.8% in 2025 due to higher medical service costs and increased usage. This would be the third consecutive year of 5% or more annual increases, up from an average of just 3% over the previous decade. What we’ve been doing so far isn’t working.

The authors of the Harvard Business Review article provided an example from Walmart. As the nation's largest employer, Walmart piloted virtual primary care services with Included Health. This experiment resulted in measurable health improvements, such as lower blood sugar levels and fewer hospital readmissions, alongside cost savings. Walmart then expanded the program to over a million employees with a $0 copay, showcasing the power of experimentation to improve employee health outcomes while generating business value.

One critical point often overlooked in the conversation about employer healthcare benefits is that decision-makers are also employees. Their behavior in using the benefits can reflect what they see as important or valuable. Understanding the broader spectrum of employee use, from entry-level workers to executives, offers an opportunity to align benefits offerings with real needs rather than outsourcing this vital aspect of business management to external vendors.

In my own experience, I led a major initiative at a healthcare payer where we conducted annual research to understand both employees and customers better. This research focused on how employees used their health benefits and what we could learn to reduce costs and improve engagement. The insights gained helped us innovate in healthcare benefits, product development, and customer service. We learned, for example, that lower earners often chose high-premium PPO plans rather than high-deductible options, contrary to our expectations. This insight led to strategic changes that helped reduce the healthcare burden on lower-income workers, increased employee satisfaction, and improved client retention.

The volume of data we collected was overwhelming. While traditional methods couldn’t fully process the wealth of qualitative insights we gathered, this is where generative AI can make a huge difference. AI can synthesize this data to identify patterns, predict behavior, and recommend personalized benefit offerings. Companies can extract valuable insights specific to their workforce with a large language model tailored to healthcare data. This can also guide the development of new services and products, allowing businesses to meet customer needs more effectively.

In short, while experimentation in benefits design is a step in the right direction, embracing the power of AI can help us go even further. By integrating AI into the decision-making process, employers can manage healthcare costs more effectively and innovate in ways that drive broader business success.