Retail strategies

Insurers are concentrating on the future-particularly on the insurance exchanges that are supposed to be up and running by 2014. After all, exchanges could bring in millions of potential customers and billions of dollars in new revenue. RAND estimates that by 2019, 28 million people will purchase insurance through exchanges.

"The challenge and opportunity is that we need to become much more efficient in how we market, and we have to become much more effective. The exchanges will create more clutter in the marketplace," says Bill Igleheart, vice president, sales and marketing, Blue Cross and Blue Shield of South Carolina.

Under the Patient Protection and Affordable Care Act (PPACA), states can establish and operate their own exchanges, partner with other states to operate regional exchanges or have the U.S. Department of Health and Human Services (HHS) establish exchanges on their behalf. Each participating insurer will follow prescribed standards so that consumers and small businesses can compare health plans in an apples-to-apples manner. Tax credits and federal subsidies will drive the purchase of coverage through the exchanges.

Although the marketing aspects seem manageable, an uncertain political landscape could impact insurers' outlook.

Last month, voters in Missouri overwhelmingly approved a measure to block the federal government from requiring individuals or businesses to purchase health insurance-one of the major tenets of PPACA. And, the outcomes of Congressional and gubernatorial elections between now and 2014 could significantly change the attitudes on how the exchanges will be created.

"There will be a number of factors in the decision for [insurers entering] new markets," says Debra Richman, vice president, healthcare strategy, at Harris Interactive. "And obviously the political landscape will be an overriding, determining factor."

Despite the uncertainty, however, insurers still need to devise long-term and short-term optimal marketing strategies for the influx of potential members.

"We don't discount the midterm elections, but we have to operate in the world we have today," Igleheart says. "So, we're full steam ahead for coming into compliance with healthcare reform. Regulations are frequently issued-sometimes a little later than we would like-so our reaction times are short. We're in a period of having to reinvent ourselves as we go along."

Meanwhile, the federal government has yet to define essential benefits participating insurers must offer. HHS has requested comments by October 1 from states, consumer advocates, employers, insurers and other interested stakeholders as it develops the rules and standards. In July, HHS announced the availability of $51 million in grants-up to $1 million per state-to assist in planning for the exchanges.

While actuarial values define the bronze (60%), silver (70%) and platinum (80%) policies, nuances in deductibles and out-of-pocket costs have yet to play out. Observers believe insurers will compete on factors other than benefit design.

"What reform is going to do is to take an already complicated industry and make it worse," says Matt Fidler, director of retail marketing for Highmark Inc. "So that's going to force companies like Highmark to focus on providing clarity about the [questions] consumers have about reform."

That is not likely to be an easy task. In a recent Harris/HealthDay poll, few consumers were familiar with the provisions of PPACA. For example, of 2,104 adults surveyed, nearly two-thirds weren't aware of insurance exchanges. Yet many of these same consumers will need to make independent decisions when purchasing health insurance.

"Employers may give you one or two choices, but in the individual market, you're going to have hundreds of choices," Igleheart says.

For some insurers, that means fine-tuning their messages for retail customers. In the past, messages changed based on what resonated at the time, which according to Iglehart, parallels societal changes.

For example, he says, during economic growth periods, more people become entrepreneurs who are responsible for buying health insurance. Also, at certain times, the company might target college graduates. Exchanges will produce a similar shift in customer aims.

"They're not going to know how to make a purchase, so we'll need to have more of an educational bend to the message," he says.