It took an entire year and political machinations that many Americans probably don’t want to think too much about, but the mandate that U.S. citizens buy health insurance or pay a fine – a major component of the Affordable Care Act -- is closer to being repealed than ever, forcing insurers to start thinking seriously about a world without it.
Though the healthcare law survived several direct attacks earlier this spring, the mandate was repealed thanks to a tax reform bill that passed the Senate this weekend. That bill will have to be be married to a bill that previously passed the House of Representatives, before being sent on to President Trump’s desk to sign. That bill didn't include the mandate repeal, but the House has the option of simply passing the Senate bill and setting up the end of the mandate once and for all. If that happens, health insurers will face the reality that they can't depend on some customers choosing to buy their product rather than pay a fine.
The likely short-term implication for this reality is that premiums will rise on the people that remain in the health-insurance marketplace. That could lead to even more people dropping coverage – the so-called “death spiral.” It’s an existential threat to the insurance sector. What can insurers do to retain customers who no longer are being prodded to buy their product by tax law?
That’s where digital comes in. Carriers may have to charge their customers more for the same insurance services. But that doesn’t mean they can’t sweeten the deal outside insurance.
One of the most common phrases heard at conferences in the insurance industry is “value-added services.” Insurers look at other firms in financial services and beyond and see companies making efforts to be closer to their customers by leveraging the wide range of digital capabilities to provide options that complement the risk management of the insurance product. In auto insurance, for example, that means packaging things like roadside assistance in with the insurance product. In life insurance, its offering fitness and longevity programs like Manulife and John Hancock’s Vitality.
When the ACA passed, health insurers had to adjust to selling individual-market policies. Unlike other lines of business, because most health insurance comes from a policyholder’s employer, they hadn’t needed to spend much time luring individual purchasers. Carriers tried lots of different things to bring those customers in. But ultimately, the mandate was the best tool they had to drive purchasing.
Now, insurers don’t have that tool at their disposal. But they can tap back into their innovative spirit, which delivered so many interesting ideas at the ACA’s outset, to keep their customers in the fold at the ACA’s sunset. Anthem’s comprehensive digital health platform is a good start.
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