Health insurers are moving in on the profitable turf dental insurers have claimed for decades; the number of health plans offering adult dental benefits more than doubled in the past two years, according to a new survey of dental- and health-insurance leaders we conducted earlier this year.
As the convergence accelerates, more consumers can expect their health plans to offer dental insurance, albeit with a separate premium – a model that could come to dominate the market in the next few years.
With any fundamental shift in healthcare, however, comes a slew of urgent, complex questions: Will some dental payers be left in the dust? How can they best adapt to these changing conditions? What are the obstacles to convergence? And what will this shift mean for consumers?
Convergence: an opportunity or a threat?
While the vast majority of consumers still rely on standalone dental insurance, such insurers are fast finding the ground shifting beneath their feet: according to a recent survey, by 2025, most foresee partnering with a health insurer and nearly half expect benefits to be bundled.
Yet while 28 percent of dental-plan leaders see this as an opportunity, nearly half (49 percent) perceive it as both an opportunity and a threat.
One need look no further than the promise of value-based health plans today to grasp the potential upsides: partnering with the right health plan – and gaining access to its capital, scale, network and technological infrastructure – can provide dental insurers with a more holistic view of their patients and help deliver better health outcomes to more patients at a lower cost.
Yet some of these very assets give health plans the ability to upend vulnerable dental payers. Executives we spoke to noted that health insurers wield deeper pockets, have “more premium to play with” – meaning they can lower prices more flexibly than dental plans – and can offer one-stop-shop convenience that will be especially appealing to younger customers.
At the same time, dental payers eyeing potential partnerships may be wary about the healthcare industry’s tendency toward deliberate – sometimes reluctant – change, as evidenced by the slow adoption of pay-for-performance reimbursement models. And insurers have still not seen the blueprint for integrating the two products and coordinating subsequent care between physicians and dentists.
Worse, health plans are not the only ones interested in competing in a market historically dominated by traditional standalone plans. Half of the executives surveyed believe that non-medical, ancillary insurers are also exerting significant pressure on oral benefits. While a net-entrant into this space, many believe they could begin grabbing membership and market share.
To thrive – and to find the right partnerships – dental plans will need to get proactive and strategic: innovating in areas like alternative payment models, tele-dentistry and data sharing; tackling their technology debt; optimizing processes via data management strategies and improved operating metrics; and exploring their own options for diversification, be it by becoming third-party administrators, acquiring or merging with other companies or offering ancillary products (e.g. vision, hearing, life, pet) of their own.
“It’s not like the mouth isn’t connected to the body”
Despite the fact that only 37 percent of US adults visited the dentist last year, respondents to the survey say the biggest factor driving dental-and-health plan convergence is the integration of oral health into overall health. This integration – combined with value-based dentistry, partnerships with health plans and the fact that having dental coverage is the best determinant of whether an individual will make regular dental visits – should ultimately lead to a higher volume of visits overall.
On the clinical side, dental-health plan partnerships – especially those with effective technology platforms – can drive better health outcomes, care coordination and greater simplicity for consumers used to navigating a complex health system.
The purchase of a one-product, two-premium plan (i.e., dental benefits bundled with broader health insurance) should also speak to a millennial consumer base increasingly in search of convenience. As other insurance markets converge, there may even be opportunities for enabling consumers to bundle medical, dental, vision, and pet insurance into single purchasing decisions. Akin to the popularity of bundling home, life, and auto…some believe that this trend may move towards healthcare.
Though Covid-19 may sow uncertainty into the coming convergence of dental and health plans, now is not the time for dental payers to sit idly by. With the momentum for bundling with health plans growing and competition from ancillary insurers heating up, only those who take proactive steps to stake out a place for themselves in this competitive landscape will thrive as convergence accelerates. So, too, will their members.
Photo: Dmitrii_Guzhanin, Getty Images