It’s fair to say that the business model for health insurance is in the process of being completely redefined by the Patient Protection and Affordable Care Act (PPACA or ACA). Health insurers can expect to spend the bulk of 2013 getting ready for the new post-ACA marketplace. How far reaching are these changes? Well, they impact critical factors like:
- Who insurers can sell to: individuals in addition to groups.
- Who insurers must sell to: no ability to deny coverage for pre-existing conditions.
- Where they sell their products: new Health Insurance Exchanges (HIE) in addition to the usual channels plus new retail branches.
- How they can sell their products: products offered through exchanges must conform to one of 5 standardized options.
- How they can price their products: they must devote 80% (in some cases 85%) of premiums to actual customer medical expenses leaving only 15% to 20% for all administration and overhead.
In addition to the changes that are mandated by the plan, there are many changes that just naturally flow from adapting to a consumer-driven market. In 2011 approximately 50 million people – or about 16% of the US population – had no health insurance coverage or eligibility for government sponsored health programs. In 2014 approximately 60% of that population is expected to purchase private health insurance coverage – that’s about 30 million new customers. In addition, another 17 million customers may come on the books as states expand Medicaid eligibility to more low-income Americans since most states contract Medicaid coverage to private insurers.
Insurers are trying to turn their marketing and sales organizations into retail operations to tap the consumer market. Like retailers, they are trying to leverage data on their customer base to drive effective marketing and communications programs. Since, other than marketing Medicare supplement programs, most insurers have had little or no consumer marketing experience they need help in this area. Compounding the problem, according to PWC, this new insurance market is made up of consumers who are likely to be less educated and many will need material in a language other than English.
Since many of these new insurance consumers have never enrolled in a health plan before, they are likely to shop for health insurance they way that they would shop for any other major purchase like a home appliance or a car – by seeking out a familiar brand. To become top of mind before these people enter the market, insurers are investing in a wide array of advertising: TV, radio, web, print and billboards to build awareness. Direct mail, email and mobile marketing will only increase as new products become available and market data is refined.
But the retail transformation goes beyond branding, insurers are opening branches where consumers can learn about insurance options and buy on the spot. In May, Horizon BCBS announced that they would be opening a new retail center in New Jersey and Blue Shield of California recently opened a “Blue Shield Store” inside of Lucky’s Supermarket in San Francisco. These are two of several retail store-fronts in 5 or 6 states with more to come in 2013.
These retail operations will naturally need to be staffed with knowledgeable people and supported with kiosks and other technology but, they will also need printed collateral, the ability to order and manage collateral across locations and the kind of seasonal and tailored signage seen in the best branch banks and retail stores.
I’ve skimmed the issues affecting health insurers and haven’t even touched on the impact to health care providers – but I think you can see that this is a market in transition. And where there is transition, there is opportunity. It may be difficult to get the attention of insurance executives with everything on their plate, however, if you do get their attention and have solutions to help them market more effectively and efficiently to consumers while driving down the costs of servicing their insured members – you could be busy for years!
Editors Note: White papers and podcasts on the impact of the ACA on business communications are available on Océ PressGo!: a business development program for Océ customers.