With the introduction of health insurance exchanges coming in 2014, insurers will be facing a whole new challenge: learning how to compete directly for consumers' business. A key step to succeeding in the exchange marketplace is to understand consumer behavior and preferences, particularly related to online and mobile environments. For some insight into how insurers can start preparing for the new tech-savvy consumers, I turned to Sam Gibbs (pictured), president of eHealth Government Systems, since his company runs a thriving private online insurance exchange.
FierceHealthPayer: How would you define the "new consumer"?
Sam Gibbs: Today, about 19 million Americans buy their own health insurance in the "non-group" individual market. In 2014, when health insurance exchanges and components of healthcare reform are put in place, it's expected that about 30 million Americans--a significant portion who are currently uninsured--will also enter this marketplace, meaning the individual insurance market will have doubled. In 2014, small businesses will also be able to purchase coverage through Small Business Health Options Program Exchanges.
Health insurance exchanges are designed to put consumers in the driver's seat when it comes to selecting and enrolling in a health insurance plan. Like Orbitz does for travelers, exchanges are designed to connect people who need health insurance with the right plan. This means more consumers will demand greater access to information--information about provider networks, monthly premiums, out-of-pocket limits, comparative information, and more.
FHP: How is the new consumer different from the traditional consumer?
SG: Traditionally, most people have gotten insurance through their employer, and this will continue to be a significant portion of the marketplace. People getting insurance through their employers generally only have a few options from which to choose, and employees working for small employers may have only one option. However, while the traditional consumer may have just a few choices, the new consumer will likely have multiple options and no benefits coordinator to walk them through the process. Therefore, this new consumer will have a greater need for tools that help them compare and select the right plan.
FHP: How must insurers adapt their strategies to acquire new consumers while also retaining existing ones?
SG: It will be critical for insurers to get ready to compete online and to differentiate their products in online marketplaces. Insurers should:
- Embrace a "no wrong door" approach, which is to say they participate in as many channels of distribution as possible: state exchanges, private exchanges, social media, mobile devices, traditional agents and brokers, etc.
- Embrace openness and transparency so that old customers feel like they know what they're paying for and why they're buying.
Since the ACA became law, a few prominent insurers who had never marketed their products on eHealthInsurance.com in the past have come to us and told us that they want to place their products on our exchange. Their rationale has been that they feel they need to begin to understand how to compete in an "exchange-like" environment. I think that's the correct mentality to have. Online marketplaces create a lot of efficiency for carriers that use them effectively.
The insurers that use our platform with great success today are the ones that have become very adept at updating products and pricing quickly to reflect changes in the marketplace. They work closely with our internal support staff to improve yields by doing things like optimizing their applications or adjusting product pricing and benefits to make them more competitive in the online marketplace.
Insurers will likely not have as much flexibility in merchandising their plans on a state exchange vs. a private exchange, but if they want to be competitive there are a few things they should have in place:
- Plan design and pricing strategies. Plan design and pricing can impact how a plan gets positioned in an online marketplace.
- Provider selection tools. Many consumers choose health plans based on their physician network, so carriers should integrate shopping tools that allow consumers to choose plans by doctor.
- Online applications. It's important to understand consumer behavior and preferences when filling out applications that require a large amount of personal information.
- Automated underwriting and approval. Building automated underwriting rules into the online enrollment process can speed time-to-enrollment and make better use of underwriting staff by focusing their time on more complex applications.
FHP: What are the challenges insurers face in dealing with new consumers?
SG: 1. Consumer preferences change quickly, especially online.
2. You need a platform that's fast enough to keep up with them.
3. Mobile device exchanges will be critical, but the government is still working on creating static web pages--building on top of a flexible platform that will allow for mobile or other apps should be a consideration early on in the process.
4. With more direct control over purchasing, consumers will demand more for their money and have specific benefit requests and desires.
At the end of the day, the consumer will be driving insurers to be more effective users of information technology. Consumer adoption of mobile technology will continue to drive every business that sells a product to find new and compelling ways to reach customers online.
Insurers will face a big challenge if they don't know how to compete in an exchange environment where they need to compete side-by-side with other insurers online. The learning curve can be steep for insurers that are new to this space. To that end, insurers also need to optimize their own online fulfillment processes so they can sell directly to consumers online.
Editor's note: This interview has been edited and condensed for clarity.