Health plans jump on retail bandwagon

Consumers increasingly want more from their health insurers, and insurers are scrambling to meet those expectations. Growing exchange markets-public and private-are driving a new focus on the individual segment and the need for better customer-service capabilities.

“Health plans are not good at dealing one-on-one with consumers, but it’s finally on their radar screens,” says Paul Lambdin, Deloitte director.

According to a new Deloitte survey, consumer-experience investments are high on health plans’ priority lists as they aim to attract and retain individual consumers. Forty-one percent of survey respondents said that consumer experience was a critically important investment area, while another 50% rated it as highly important.

Plan investment includes better use of analytics and improving touch points. For example, 26% of plans surveyed said they provide virtual customer service via web chat, and another 56% said they will be investing in the capability within the next three years. Enhancing consumer experience is becoming the new norm.

And it’s no wonder. Health plans are realizing that the health insurance exchanges with their 8 million enrollees are emerging as a sizeable, attractive market-a market that relies on one-to-one retail sales.

“No one would have taken a bet that the administration would beat its own goal of 7 million individuals enrolling in the exchanges by the end of open enrollment, especially with the stumbling start of Healthcare.gov,” Lambdin says.

In addition to the large number of signups, the market is also becoming more attractive for 2015 now that major bugs have been worked out of the majority of exchange platforms, Lambdin says.

Some insurers limited their participation to minimize their exposure to initial growing pains during the first implementation year. Open enrollment was rough, according to health plans, and even now, weeks after the signup deadline, they’re still reconciling the 834 transactions, processing the enrollments and collecting premium and subsidy payment-no small task.

“The school of thought was that the first plan to have a consumer through the exchange was guaranteed to have a consumer with a bumpy experience,” Lambdin says. “If that consumer had bumps, the thought is that the consumer would change plans the following year, through no fault of your own.”

In fact, Lambdin says, one plan that he works with wants to get the consumer-experience basics right before tackling any new initiatives. Being able to confirm  enrollment and assure members that they have coverage is the priority.

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Exchange Competition

Consumers can window shop for plans, just as they would in any retail environment, so competing exchange plans must find ways to highlight their service in order to attract new members.

According to the Kaiser Family Foundation, half of states have four or more insurers selling a variety of plan choices on their exchanges, and 12 states have 10 or more. Two states with a history of competitive individual segments, California and New York, appear to have even more competition now than they have in previous years.

Recently, Arkansas officials announced that all four participating health exchange insurers are planning on increasing their prescence by selling products across the entire state for 2015. Demographics-39% of exchange enrollees are under age 34, making Arkansas the second-youngest exchange-might be playing a role in the plans' decision. Officials believe the increased competition statewide will hold premiums in check.

“You need to get a bead on how much competition there really is,” Lambdin says. “The state counts of participating insurers aren’t very meaningful. It has to go down the micromarket level.”

One development to watch at the micromarket level is the new entrants.

For example, Oscar Health Insurance in New York launched in 2014 and has enrolled 16,000 members so far. The plan is unique in that it provides over-the-phone access to primary care physicians, for which the plan reimburses $40 per call, and the members pay nothing. Its website offers price comparisons of various providers based on typical words that a member might type into its search function, such as “asthma.” The price data comes from an outside source with four years of claims information.

“You can question the viability of Oscar and whether they’ll make it,” Lambdin says. “But they raise the bar for consumer tools for every carrier in the market.”

He says the bar is raised higher every year, but plans, especially smaller plans, have to check their ambitions. Smart investment should aim to move the needle against the competition. While larger plans have the advantage in maturity and critical mass, smaller plans can also be more agile.

“Analytics screams out as an area where plans are making investments,” Lambdin says. “Analytics in service and understanding the consumer is a megatrend."