How Obamacare is impacting payers
The Affordable Care Act (ACA), known as Obamacare, is pushing healthcare stakeholders to change quite a lot in their traditional business models. Hospitals are focusing on outcomes, doctors are promoting patient engagement and Accountable Care Organizations struggle to reduce the cost of care. But when it comes to paying the bill, how are insurance companies dealing with the change? One thing is certain: competition is on the rise and the key to success is putting individual customers back at the center of their business strategies.
From B2B to B2C
One of the main elements bringing payers to change their business models is the new freedom of choice given to consumers. The ACA actually allows individuals to decline Employer Sponsored Insurance (ESI), and they can now choose their insurance company according to their own preferences, instead of having to accept the plans offered by their employers. Also, as costs go up, many employers are dropping health benefits and, according to a McKinsey study, it is expected that 30% of employers will definitely stop offering ESI after 2014.
Therefore, instead of communicating and selling mostly to companies, insurers will have to make huge efforts in terms of sales, marketing and business development to become more “Business to Consumer” (B2C) and less “Business to Business” (B2B), thus focusing on individual plans rather than employers.
New clients demand new services
With the ACA, customers will more easily change insurer to get better prices, better coverage and better customer service. This will force payers to compete with each other in areas they have almost ignored in the past years and where they find themselves unprepared: patient engagement solutions, eCommerce, eCare, customer portals, sales and marketing, call centers, business development, claims and mobile channels. These are all domains where payers are not ready to support more individual customers, especially with the former uninsured now buying coverage.
Scale is the answer
In the past few months, we have been witnessing a wave of megamergers in the healthcare insurance scene. The so-called “Big Five” — the largest players in the market — have been reduced to three: Aetna acquired Humana and Anthem acquired Cigna, now competing with the market leader, UnitedHealthCare. These three massive corporations, worth around 100 billion dollars each are likely to cover near 42% of the American population, according to the American Medical Association.
Scale is becoming crucial to develop customer-oriented services, attract new clients, face the competition and gain bargaining power to get the best deals with hospitals. Mergers are also a strategic path to a wider national presence. It is a key factor to attract new customers and facilitate marketing efforts, especially now that insurance plans sponsored by employers are declining and the proximity with individual customers is a necessity. Naturally, mergers are also essential for a more extended data sharing that will allow the development of new solutions in digital and mobile health.
This fast expansion of the individual insurance market will bring more quality to the plans and contracts offered by insurers, and we can expect a higher level of investment in technology and mobile solutions that will facilitate the integration of new clients and foster the emergence of customer-based services. After all, individuals have always been the final customers, and it is time for them to get recognized as such.
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