The Great Healthcare Consumer Awakening
An uprising is unfolding right before our eyes in healthcare, and it is incredibly exciting.
As medical costs continue their relentless climb, we the people are shedding our forced role as passive recipients—and payers— of care. We’re emerging as more active, vocal participants in the healthcare system, demanding transparency, affordability, and a say in healthcare spending. This shift, which we might call a "healthcare consumer awakening," could fundamentally alter our sickcare system.
The term "consumer" in healthcare is contentious. Some say that it diminishes the vulnerability and humanity of patients. But you could argue that this has inadvertently reinforced our passive role in the healthcare system. Yes, we are periodically patients when we need care. But we are also the ultimate payers of healthcare—every day, sick or well.
We pay for healthcare through multiple channels, often invisibly. We pay premiums, accept lower wages in exchange for employer-sponsored healthcare, and watch as 24% of our tax dollars flow into the healthcare system. Our financial relationship with healthcare makes us consumers in the truest sense. The difference is that, unlike in other markets, we've been consumers without choice— bearing the costs without the corresponding power to make informed decisions or drive change.
But this is changing. Healthcare consumers are becoming more informed, empowered, and economically engaged; and signs are pointing to the fact that this is changing a system that has long treated us as passive recipients of both care and costs. Let’s dive in.
Why now?
This awakening should come as no surprise. A convergence of pressures has pushed us to a tipping point.
First and foremost is the issue of cost. For decades, healthcare expenses in the United States have outpaced inflation at an alarming rate. In 2023, national health spending grew by 7.5%, reaching a record $4.8 trillion— or $13,493 per person. This trend has significantly outpaced wage growth, placing an ever-increasing burden on American families. As healthcare consumes a larger portion of household budgets, consumers are increasingly questioning the value they receive for their dollars.
Healthcare coverage is also changing. New models are putting more responsibility—and potentially more control—in the hands of consumers. Two examples of this include:
High-Deductible Health Plans (HDHPs). In an effort to control costs, many employers have adopted these plans, which offer lower premiums but expose consumers to higher out-of-pocket expenses before insurance coverage begins. As of 2023, 29% of covered workers were enrolled in an HDHP with a savings option, a huge increase from just 4% in 2006. This shift has made consumers more acutely aware of the true costs of their healthcare, often for the first time. This heightened cost awareness has pushed many to become more engaged and discerning healthcare shoppers.
Individual Coverage Health Reimbursement Arrangement (ICHRA). Introduced in 2020, ICHRA allows employers to provide tax-free dollars for employees to purchase their own health insurance plans. The HRA Council reported a 29% increase in U.S. employers offering ICHRAs between 2023 and 2024, and an 84% growth among applicable large employers (50+ full-time employees). With an estimated 5,000 employers offering ICHRAs in 2024 and companies like Oscar Health targeting this market, ICHRAs are certainly having a moment.
Both HDHPs and ICHRAs make people more aware of what healthcare costs. They give individuals more say in their coverage. But they also mean people have to learn more about health insurance and medical prices. As these options spread, people want clearer information, better ways to compare choices, and a healthcare system that's easier to use and understand.
Recent legislative efforts have also played a role in this awakening. The No Surprises Act, which went into effect in 2022, and other hospital price transparency rules have begun to illuminate the often opaque world of healthcare pricing. As consumers gain access to more information about the costs of their care, many are confronting the realities of medical pricing disparities and seemingly arbitrary fee structures.
And of course, the COVID-19 pandemic has starkly highlighted existing healthcare disparities, bringing issues of access and equity to the forefront of public consciousness. This has fueled a broader conversation about the fairness and effectiveness of the current healthcare system, prompting many to question long standing assumptions about how healthcare should be delivered and financed.
As these pressures have mounted, Americans are reaching a breaking point. No longer content to accept rising costs and limited choices as inevitable, they're taking action.
If you want to learn more about healthcare costs, listen to this episode of The Heart of Healthcare with Dr. Elisabeth Rosenthal, titled Healthcare: The Price is Not Right.
Employees are suing their employers for overspending on healthcare
Most Americans receive health benefits through their employers. And people are starting to hold their employers accountable. In the last couple of months, employees at Johnson & Johnson and Wells Fargo have taken the extraordinary step of suing these employers over alleged mismanagement of health benefits.
The lawsuits allege that these companies, as fiduciaries of their employees' health plans, failed in their responsibility to be prudent stewards of these benefits. Specifically, the employees claim that their employers overpaid for prescription drugs, effectively wasting plan assets and driving up costs for employees.
This signals a new level of sophistication among employees in understanding and questioning healthcare financing and plan administration. And regardless of whether the lawsuits are successful or not, they could force employers across the country to reevaluate their approach to healthcare benefits, potentially leading to more aggressive negotiation with insurers and PBMs, increased transparency, and a greater focus on cost-effectiveness in healthcare spending.
Some employers are letting employees collectively choose health benefits
While some employees are turning to the courts, others are working with their employers to reshape health benefits from within. I recently heard about a novel approach on the Tradeoffs podcast: allowing employees to collectively decide on their health benefits package.
The episode followed an organization which had employees debate and decide together what health benefits they wanted. They were given 70 poker chips to spread around the whole board. The more generous the benefit, the more chips that benefit costs. The entire board of benefits would be 92 chips. Ultimately, this specific group agreed to lower their wages to get more healthcare coverage, even though cost is the number one reason people are dissatisfied with their current health plan.
Employees ultimately pay for their benefits, whether through lower wages or higher premiums, so they should be active decision-makers with real influence over their healthcare coverage. Platforms like Collective Health, where I’m a Board Member, are enabling this trend. We help employees better understand, navigate, and access all their health benefits, so they can engage wisely in their care.
The rise of healthcare 'shopping'
Consumers are increasingly researching their options before making healthcare decisions, a trend that has accelerated in recent years. By researching providers and costs, consumers are taking a more active role in their care, considering factors such as quality, convenience, and value alongside price.
According to a recent McKinsey report, economic uncertainty has spurred consumers to become more discerning in their purchases across various industries, including healthcare:
45% of consumers report researching providers and in-network costs before choosing a health insurance plan
44% of consumers research providers before making an appointment
Among those who research providers, consumers look at an average of two to three options before making a decision
This is a significant change from just a few years ago. The 2017 survey showed that only 20-30% of healthcare consumers conducted similar research. The near doubling of this behavior in such a short time is illustrative of the rapid increase in consumer engagement in healthcare decision-making.
The rise of healthcare shopping is both a symptom and a catalyst of the broader consumer awakening in healthcare. It reflects growing consumer empowerment and drives further changes in how healthcare is delivered, priced, and experienced.
More direct-to-consumer options than ever
A major force driving the healthcare consumer awakening is the explosion of direct-to-consumer (DTC) healthcare options. Digital health companies are no longer just a Silicon Valley phenomenon—they're becoming household names across America.
I often run what I call the "Ohio test" when I talk to family in my home state. I ask about the healthcare brands they know of or have used. Recently they've mentioned Devoted Health, Virta Health, 23andMe, Hims, and Winona Health. This kind of brand recognition for digital health companies was unheard of just a decade ago.
The scope of DTC healthcare is broad and growing. Wearable health tracking devices, such as smartwatches and smart rings, are now owned by 44% of Americans, who use them to monitor metrics from sleep patterns to heart rhythms. Apple just received FDA approval for AirPods to be used as over-the-counter hearing aids, and the Apple Watch can now help users detect consistent signs of sleep apnea. Even diabetes management giant Dexcom has recently made its continuous glucose monitoring (CGM) systems available directly to consumers without a prescription.
The direct primary care model, where patients pay a monthly fee for unlimited primary care services, is gaining traction for people who are underinsured or have a HDHP. So is medical tourism, with an increasing number of Americans traveling abroad for major procedures, seeking high-quality care at a fraction of U.S. prices.
DTC healthcare is also addressing traditionally stigmatized areas. Virtual options now exist for healthcare needs like menopause treatment, fertility services, erectile dysfunction care, gender-affirming treatments, and abortion. In fact, one in five abortions—approximately 17,000 per month—now occur via telehealth. That’s up from just 4% in 2022. (Notably, over 90% of individuals who received abortion medication via telehealth report satisfaction with the experience.)
How this all plays out
I’m a healthcare optimist, so I’m excited for the potential impact of this healthcare consumer awakening.
As consumers become more engaged and empowered, we're likely to see a cascade of changes rippling through the healthcare system. We can expect a push for greater price transparency and options, potentially leading to more competitive pricing and lower costs. The rise of direct-to-consumer health brands and the growing demand for convenience could push traditional healthcare providers to offer more flexible, patient-friendly services.
On the employer side, we’re likely to see the continued growth of self-directed plans like ICHRA and HDHPs. This trend towards more personalized, flexible benefit packages puts the employee in the driver’s seat as more active participants in their care. I do think we’ll see more lawsuits like those from J&J and Wells Fargo, which will lead the entire industry to reassess healthcare spending, especially our relationships with the PBMs.
As consumers become more active participants in their healthcare, we have the opportunity to create a system that is more responsive, efficient, and patient-centered. The healthcare consumer awakening isn't just about reducing costs or improving convenience— although I hope it can do that too. It's about reorienting our healthcare system around the needs and preferences of the people it serves. And that's a future we can all look forward to.
