Will Health Insurers Be Rendered Extinct?
Insurance Experts' Forum, March 28, 2012
This third day of oral arguments on the legality of President Obama’s healthcare law sees health insurers holding their collective breath, facing a future guaranteed to represent change. Whether that change results in 49.9 million new customers will remain an unknown until June.
Regardless of the perceived positives and negatives surrounding the law, the health insurance industry is being given an opportunity to take a fresh look at how it can succeed at the business it’s in. An opportunity it should take.
According to customer experience expert Satmetrix, its 2012 Net Promoter Industry Benchmarks revealed that major health insurers had nearly as many detractors as promoters, tallying up an industry average NPS of just 4 percent (0 percent if sector leader Kaiser Permanente is not included).
The reason Kaiser Permanente ranked as it did again this year with an NPS of 33 percent is its novel business model that combines insurance coverage with healthcare delivery in one coordinated service. This model is not lost on two bloggers from the New York Times, Ezekiel Emanuel and Jeffrey Liebman, who in January posted this bold prediction: By 2020, the American health insurance industry will be extinct.
“Insurance companies will be replaced by accountable care organizations—groups of doctors, hospitals and other health care providers who come together to provide the full range of medical care for patients. Already, most insurance companies barely function as insurers. Most non-elderly Americans—or 60 percent of Americans with employer-provided health insurance—work for companies that are self-insured. In these cases it is the employer, not the insurance company, that assumes most of the risk of paying for the medical care of employees and their families. All that insurance companies do is process billing claims.”
This will obviously be a point of contention among health insurers, but it brings up a fact: health insurers are under the microscope, and bad press doesn’t help. Consider just one of today’s stories, this from the Baltimore Sun: “Health care reform is complicated because insurers try to find ways not to pay.” Other pressures center around valuation, whether insurers have enough government exposure (Medicare/Medicaid), technology and regulatory challenges, intense competition and more.
Carriers that want to do more than survive the pending changes from Washington may be advised to look to their competition for answers. In particular, Aetna. With tentacles reaching out to several fronts, the company has an eye focused on ways to make changes of their own by engaging the consumer with more than just a health plan offering.
In late 2010, Aetna’s successful bid for health information exchange technology provider Medicity had some in the industry questioning the insurer’s long-term plans. Yet with the acquisition, comes the iNexx healthcare app platform, which Aetna’s Chairman, CEO and President Mark Bertolini has offered to developers, stating “we will give away the SDK (software development kit) for both the consumer platform and the provider platform to allow anyone to write apps to be sold on our platform.” This could create more opportunities in the mobile health technology market that is projected to quadruple to $400 million by 2016.
At an investor conference late last year, Aetna revealed that it acquired Healthagen, the developer of mobile app iTriage, which attempts to remake the user experience of Web-based symptom checkers like WebMD.
Bertolini told investors at the meeting, ”We’re going to begin to change the health care industry by giving people tools they can put in the palm of their hand.”
Bertolini’s goal for iTriage is customer retention, which he openly maintains is the catalyst for growth. However, the app’s existing 3 million iTunes downloads also provides Aetna with a new set of customer leads. Further, Healthagen’s existing digital relationships with hospitals and urgent care facilities may bode well for all stakeholders.
Yet another of Aetna’s tentacles nabbed PayFlex Holdings, Inc., an independent account-based health plan administrator, with approximately 1 million accounts and approximately 3,300 direct employer customers.
Aetna’s forward-thinking technology efforts are complemented with a bigger-picture goal that looks and feels a lot like Kaiser Permanente’s. Aetna and the Aetna Foundation is funding $750K for coordinated care studies to determine ways to coordinate treatment to improve patient health and curb hospital readmissions.
Undoubtedly, each health insurance company will have to determine its own path. But if the industry pays attention and plays follow the leader(s), predictions of the industry’s extinction may well become a non-sequitur.
Pat Speer is editor-in-cheif of Insurance Networking News.
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