From the October 24, 2011 issue of National Underwriter Life & Health Magazine •Subscribe!

Forced Smile

A tough economy, employment concerns and patient fear make for a challenging dental enrollment season

Benefits specialists are not quite sure what to think about the current dental insurance enrollment season. Many employers have been reporting solid profits this year and adding employees. Then Hurricane Irene hit, European financial crisis fears resurfaced, and the mood darkened.

“It’s a struggle out there,” according to Steven Stender, a senior actuarial consultant at OptumInsight Consulting, Eden Prairie Minn., a unit of UnitedHealth Group Inc., Minnetonka, Minn. (NYSE:UNH).

The dental benefits picture looked bright in early September, Stender said, but then at the end of the month, “things tanked.”

THE CRUNCH

Dental insurance is almost as popular with the employees who have a chance to sign up for it as major medical health insurance is.

U.S. civilian employers offered major medical coverage to 73% of workers in March, and the take-up rate among workers with access to coverage was 81%.

In the dental insurance market, the offered rate was only 47%, the same as in March 2010, and strong employee participation rates helped push the take-up rate to 79%. In 2009, in a weaker economy, employees kept the take-up rate at 80%.

In 2009, the latest year for which figures are available, dental insurance covered about 57% of the $102 billion cost of U.S. dental services, and patients covered most of the rest of the cost with their own cash.

The dental services market has been booming in recent years.

“For a while,” Stender said, “dentists were making more money than regular physicians.”

Then, in 2008, the financial crisis hit.

Now, Stender said, “dentists are complaining about empty chair time.”

More affluent consumers are somewhat less likely to go in for teeth whitening services; the most cash-strapped consumers are more likely to have sick teeth pulled out and replaced by dentures rather than replaced by high-cost implants.

Dental plan enrollment also suffered.

Mike Schwartz, a vice president in the dental product management at a unit of MetLife Inc., New York (NYSE:MET), said total dental plan enrollment and new dental plan sales tend to change much more slowly than the equivalent figures in the major medical market, because the cost of dental coverage is relatively low.

But the overall weakness of the economy and the stubbornly high unemployment rate have both shaped dental insurance results, Schwartz said.

“Growth has been affected by employers who have reduced jobs, which affects the number of covered lives participating in employer-sponsored dental plans,” Schwartz said.

Sales for 2011 have been stronger than sales for 2009 and 2010, but, so far, 2011 is not stellar, Stender said.

PEARLY WHITE ECONOMIC INDICATORS 

One concern is the kinds of medium-term and long-term effects the slump might have on Americans’ mouths.

Benefits experts tend to divide dental plan enrollees into two categories that could be represented by the hypothetical workers: Broke Bob and Eager Ellie.

The Broke Bobs of the market have responded to the recession by skimping on preventive care—even when they still have coverage and their plans provide preventive care for low prices, or for free.

The U.S. Centers for Disease Control and Prevention (CDC) may have caught the beginning of that trend when it released 2008 survey figures that show the percentage of U.S. adults who see a dentist at least once per year fell to 43% in 2008, as the economic crisis was developing, from 44% in 1996. Officials had hoped the annual dental visit rate would increase to 56%.

Probably because of the Broke Bobs’ unwillingness or inability to get appropriate dental care, “you’re seeing more severe cases within dentists’ offices,” Stender said.

But, at the same time, the Eager Ellies have responded to fears of layoffs by getting thorough dental care while they still have coverage.

At MetLife, for example, Schwartz saw an increase in utilization of dental services that started in late 2008, as individuals sought care before their dental benefits disappeared. “This has stabilized somewhat recently,” Schwartz said.

The rush by prudent, nervous Eager Ellies to use their dental benefits has helped offset the effects of the Broke Bobs going without care, by getting those conscientious employees’ mouths into unusually good shape.

The Eager Ellies’ rush to get cleanings and checkups, and overall improvements in dental hygiene and dental care, seem to be contributing to improvements in oral health.

Severe gum disease, for example, affected just 16% of U.S. adults ages 35 to 44 during the period that lasted from 1999 to 2004, down from 22% in the 1988-to-1994 time period, according to the CDC.

The percentage of adults ages 65 to 75 who had lost all natural teeth fell to 24%, from 29%.

The CDC also has found mixed results in indicators of oral health in children.

Teens are somewhat less likely to have cavities in their adult teeth, but young children are much more likely to have cavities in their baby teeth.

The incidence of cavities in the baby teeth of children ages 2 to 4 has increased to 24%, from 18%; the goal set a decade ago was to get the percentage down to 11% by 2010.

Incidence in children ages 6 to 8 has increased only one percentage point to 53%, but officials had hoped to cut the percentage to 42%.

Cavities may seem like a minor issue, but, “for children, untreated cavities can cause pain, dysfunction, school absences, difficulty concentrating, and poor appearance—problems that greatly affect a child’s quality of life and ability to succeed,” CDC officials say in a report discussing oral health objectives.

Similarly, growing evidence suggests that gum disease does more than cause unsightly red pockets in gums.

“Gum disease also may be connected to damage elsewhere in the body,” officials say. “Recent studies link oral infections with diabetes, heart disease, stroke, and premature, low-weight births.”

WHAT IT MEANS 

The state of the economy is causing headaches for insurers and benefits advisors, but it also is creating opportunities, by making employers hungry for new ideas.

“The economic pressures that employers are experiencing has them reviewing the overall cost of the benefit packages that they provide to their employees,” Schwartz said. “They are looking for advice on how to provide quality dental care benefits in a cost effective way.”

MetLife is trying to meet that need by emphasizing ways to use dental plan design changes to contain costs while helping employees still get as much of the care they need as possible.

“Employers who have not reviewed their dental plan features for years may have a plan that does not reflect current concepts of dental care,” Schwartz said.

Current clinical research can lead to improvements in employee satisfaction along with reductions in cost, he said.

In some cases, he said, an employer might consider placing higher coverage percentages for services that prevent the initiation and progression of dental disease and covering more elective services at lower levels.

At many employers, economic pressure is accelerating the shift toward employee-paid, voluntary dental programs and away from the traditional employer-paid programs.

Other employers might be able to save money by shifting to networks with a smaller number of higher-volume dentists who offer plan enrollees better discounts.

Employers seem to be more interested in network plans in general, and the dentists and other providers are showing more interest in increasing patient flow and speeding up the claim reimbursement process by joining networks, Schwartz said.

 

PRODUCT STRATEGY 

Many large dental insurers are announcing major additions to provider networks this fall.

Lincoln National Corp., Radnor, Pa. (NYSE:LNC), has added 173,000 provider locations to its network, increasing the size of the network by 32%. The company also has added claim management technology.

Dearborn National, an arm of Health Care Service Corp., Chicago, added 1,220 locations in Arizona, Colorado and Utah by making a deal with a Utah dental network company.

Dental insurers also are announcing initiatives aimed at consumers who left outside the group dental plan universe.

Aetna Inc., Hartford (NYSE:AET), is working to ramp up association sales, by teaming up with an association that serves the self-employed.

Delta Dental of California, San Francisco, announced that it and its affiliates are donating $162,000 to help a charity that provides free dental care for people who have dental coverage.

Aspen Dental Management Inc., Syracuse, N.Y.—a dental care provider—is promoting new offices by offering free new-patient exams and free X-rays for patients without dental coverage. Other clinics, such as Eon Clinics, Milwaukee, are fighting back, by holding seminars to extol the virtues of dental implants and other products and services now getting plan pruners’ attention.

Newly poor patients appear to be a growth market. They may not have much money, but there certainly seem to be plenty of them.  

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