Dental coverage has long been sold separately from medical insurance, even though studies have shown oral health has a strong link to a patient's overall health. An employer or individual shopping for health and dental coverage are likely to buy plans from two separate companies.
But that may be changing. A new survey shows that health insurers are increasingly interested in selling dental coverage to their health plan customers as a way to grow profits and align with the movement toward value-based, whole-person care. While the shift could threaten the viability of standalone dental insurance companies, it may also bring about a more convenient experience for patients.
Approximately 80% of health insurers also offer dental coverage currently, an increase from 68% in 2018, according to a report and survey of 106 insurance executives by Chicago-based consulting firm West Monroe Partners. But insurers haven't always bundled dental benefits with health coverage, preferring instead to focus on the much more profitable medical side, said Will Hinde, one of the report's authors and a managing director at West Monroe.
The revenue an insurer collects from dental policies is about 3% to 4% of the amount it collects for a health insurance policy, he said. Still, dental insurance has proven profitable and the healthcare industry has become more focused on providing integrated care to lower spending. New technology is making it easier for insurers to analyze claims for both medical and dental trends, enabling insurers to offer a one-stop shop for both products.
Nine out of 10 insurance executives surveyed said the convergence of health and dental coverage is already happening or they expect it to eventually, according to the survey. Most of those who said the convergence is already happening agreed that it's picking up speed. The portion of health insurers offering adult dental benefits bundled with health coverage has grown from 22% in 2018 to 48% this year. Even so, about 97% of consumers still buy standalone dental plans, according to the report.
Health insurers spot opportunity in what they say is an expanding market. Most respondents—about 63%— said they expect the market for individual dental plans to grow in the next five years, while 48% said they expect the market for employer-sponsored dental plan membership to grow.
According to the latest data from the National Association of Dental Plans, about 260 million Americans, or 80% of the population, had dental coverage in 2018, mostly through their jobs. Roughly 66.7 million Americans had no dental coverage. The number of Americans without medical insurance was much lower that year at 27.5 million, thanks in large part to coverage expansions under the Affordable Care Act. The healthcare law did little to address dental coverage and care.
Insurers suggested that the different values among age groups are also driving the shift away from standalone dental coverage. Employers historically have opted to allow workers to choose the best health plan and the best dental plan for themselves and their families among several options, according to the West Monroe report. But millennial workers are more interested in the convenience of making one purchasing decision, it said.
The report noted that nearly a quarter of dental insurers see health plans' interest in bundling dental benefits as solely a threat, but 77% see it as somewhat of an opportunity. More than half of dental insurers see themselves partnering with health insurers by 2025. While only a third of dental insurers today offer bundled products with a health insurer, 46% say they'll do so in the next five years. Some plan to branch out into other ancillary insurance products, such as vision, hearing, or even pet insurance.
