2013 Outlook on Health Plans
Interview with Bill Copeland
Health care reform and consumerism are driving changes that cannot be ignored by health plans, according to Bill Copeland, vice chairman and principal, Deloitte LLP, and leader of the U.S. Health Plans and Life Sciences and Health Care practices. Read on for his insights on how the industry might contend with the challenging year ahead.
What is the key issue facing the health plan sector in 2013?
Health plans face an industry milestone on October 1, 2013. That’s when they should provide their offering for open enrollment on the new public health insurance exchanges. Deloitte projects,1 based on likely scenarios, that in 2014 there could be up to 11 million enrolled in health insurance exchanges, with up to 69 million enrolled in 2021, putting exchange readiness at the top of a plan’s to-do list. The public exchange market is not just “more of the same” but can present significant changes and challenges in underwriting and medical cost management, regulatory compliance and operations. Making these adjustments can add costs to the plans, and at the same time, increased competition can drive down premiums, further depressing margins. Compared to the populations health plans are used to working with, the exchange enrollees will use different criteria to select a plan and will have less experience in navigating the health care system. They also are more likely to be sick.
The Affordable Care Act (ACA) defines some exchange product levels and cost-sharing options; in addition, each state is supposed to define what minimum essential benefits are. The consumer shopping experience on exchanges can be somewhat limited, so health plans are trying to figure out how to distinguish their offerings – what non-price elements they might add – to stand out in the marketplace, as well as how to effectively market those products and services during the consumer shopping experience because the experience will largely be controlled by the exchange operator.
Health plans are spending hundreds of millions of dollars to make sure their systems can accommodate these new enrollees – many of whom may not speak English or haven’t had insurance before. It is a challenging time for the industry.
What are some steps companies can take to manage through the current climate of economic uncertainty?
“Health plans are trying to figure out what consumers want from their health insurance provider and in their insurance coverage because – for the first time – individual consumers can be an important driver of health plan business.”
There is considerable merger and acquisition (M&A) and consolidation activity as health plans seek to increase competency and/or scale. Companies are building out their capabilities to make sure they can deliver a range of products and services (e.g., Medicare Advantage, Part D, Medicaid). In addition, health plans are seeking both market scale and member scale via acquisitions.
Companies are also developing new offerings, such as self-funding for lower-level products, to help offset pending insurance rate changes in the small group market. Some rates are going to double in certain states, and plans are sorting through how they can retain these smaller employers.
Importantly, health plans are trying to figure out what consumers want from their health insurance provider and in their insurance coverage because – for the first time – individual consumers can be an important driver of health plan business. In response, companies are investing in research firms and hiring people from consumer businesses to help them compete in the new individual marketplace.
What are high-performing companies doing to foster innovation and growth?
Health plans are appointing chief innovation officers to identify sources of innovation inside and outside the industry that they can buy or leverage. More collaboration is taking place between health care providers and health plans to enable accountable care. Health plans are also helping to facilitate individualized care (an important enabling piece of accountable care organizations). It’s not always obvious what tools and technologies are needed, and there are a lot of different directions companies can take. This provides health plans opportunities to think creatively and develop differentiating technologies. Clearly, clinical tools, communication tools and analytics engines could all be important parts of the picture.
Companies are also trying to identify ways consumers can get more value from their plan memberships through the mobility channel – such as creating apps that enable live chats with customer service providers, locate the most convenient place to receive care and make online appointment scheduling easy. These not only provide value to the consumers, but they can be used to help encourage a member to receive care from a low-cost provider or channel – and the data from these apps can be used in analytics engines to provide more detailed insight into consumers’ needs and behaviors.
1. “Impact of health care reform on insurance coverage: Projection scenarios over 10 years – update 2012,” Deloitte Center for Health Solutions
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