Screen Shot 2020 07 07 At 1 27 14 Pm

Convergence of dental and health insurance is accelerating, according to study

July 7, 2020
Interesting things are happening in insurance: health and dental insurances are converging. What started this trend and how is it progressing? Quickly, a survey finds. How will convergence affect your practice and your patients?
Meg Kaiser, Associate Editor

Insurance convergence is accelerating. Health plans are offering dental benefits more frequently than they were two years ago, which is threatening the stand-alone-dental business model. These are some of the findings in a new report from West Monroe, a national business and technology consulting firm, called “Convergence of dental and health insurance accelerates.” 

The study, based on a survey of 106 executives of commercial and government dental and health plans across the country, is a follow-up to West Monroe’s January 2018 signature research, “Turning point: The fate of standalone dental,” which signaled an aggressive move by health plans into the profitable turf of dental payers.

Overall, the percentage of health insurers offering dental insurance products has risen substantially, from 68% in 2018 to 80% today. Also, the percentage offering adult dental benefits has more than doubled to 48%, evidence of an accelerating shift toward convergence. Nearly nine in 10 health and dental plan executives say that convergence is already happening (43%) or will happen eventually (44%). Of executives who believe convergence is already happening, 89% say it is accelerating, far higher than the 21% who said so in the 2018 study. 

West Monroe conducted this research in order to provide timely information for dental and health insurers that empowers action for dental insurers at a time when it’s most urgent. The 2018 survey was a wakeup call for dental insurers that health insurance executives were taking an aggressive approach toward their turf. The latest research confirms that health insurers’ move into the dental space is accelerating and competition is getting more intense.

Dental insurers are acknowledging and preparing for the change. Many see convergence as an opportunity to partner with new entrants, “embedding” their benefits in health plans. During the two years, even the business model for convergence has shifted to one that is more viable in the near term. Somewhat surprisingly, dental insurers are more convinced than health insurers that they are losing ground in the contest for market share. Only 31% of dental insurers see the market for standalone dental remaining stable or growing, compared to 56% of health insurers.

Both of the West Monroe studies examined potential scenarios for the future of dental plans, such as:

  • Dental is absorbed into overall health insurance (one product, one shared premium).
  • Dental plans are brought on as partners to health insurance (two products, shared or separate premiums).
  • Dental plans diversify, expanding into other ancillary coverage such as life, short-term disability, and pet insurance to remain standalone offerings.

An insider's perspective

DentistryIQ reached out to Benjamin Baenen, Director in West Monroe Partners’ Healthcare & Life Sciences practice, with a few questions about what convergence means for the dental and insurance marketplaces, how it will affect patients, and whether the pandemic has had any effect on the convergence activity.

DentistryIQ: Why did health insurance providers begin to include dental coverage?

Benjamin Baenen: Health insurers have more capital to work with and recognize the benefits of offering a comprehensive, convenient plan for their customers, and dental insurers are increasingly recognizing these competitive realities of the marketplace. The trend is toward health executives preferring to bundle dental benefits with their health plans, but administer dental as a separate product, in a one-product, two-premium model. We’ve seen the rising trends in bundling insurance into a single purchasing decision, such as home/auto/life, and consumers have expressed interest in this single buying decision. It’s a great way to increase stickiness for health plans.

DIQ: How will convergence affect dental providers? Patients?

Baenen: Dental payers and patients both benefit from convergence because payers can look outside of the traditional product and offer more meaningful insights into patients. By leveraging health and dental data, insurers can deliver better health outcomes by focusing on a more holistic patient view. We believe the future is in coordinated care and value-based reimbursement with physicians and dentists, and this data pointing to convergence supports this hypothesis. 

DIQ: What’s your advice to stand-alone dental providers who don’t want to be left behind?

Baenen: Even for dental insurers already taking the change seriously, it’s time to seize the moment: fine-tune your operations, innovate aggressively, capitalize on your strategic differentiators, diversify products and services, rapidly improve tech capabilities. Those that act will prosper, while the rest face diminishing market share as they struggle against new competition that moves in. A lot of clients are dealing with technology debt and old systems, and now is the time to clean up internal operations.

DIQ: Has the pandemic sped up the convergence process in the last few months?

Baenen: For insurers, the pandemic appears to be introducing particularly high levels of uncertainty due to the tens of millions of people out of work and without health coverage. As the survey found, dental insurers increasingly see convergence as an opportunity. Regardless, we believe that convergence will only gain momentum. During these volatile times, insurers should consider focusing on offering technology tools—such as individual shopping portals and increased mobile capabilities—for supporting their members. There may also be an opportunity to provide plans for the recently unemployed. We anticipate significant impacts made by invoice credits, waiting periods, and teledentistry services.

DIQ: Please share any other information you believe is of interest.

Baenen: Overall, it’s important to remember that the shifts in the dental market over the last two years prove that insurers should be thinking and acting faster, even though they aren’t typically built for rapid change. Dental plans that hold their own in this competitive landscape—in which the momentum for bundling with health plans is growing and competition from health and ancillary insurers is intensifying—must have strong foundations and capitalize on opportunities. And, despite uncertainty due to COVID-19, dental insurers that take a proactive approach without letting near-term challenges get in the way will succeed. 

Read the entire report here.