The Affordable Care Act, and with it the American health-care industry, has been a hot topic for years, but it’s been especially superheated since President Trump and the Republican Party stormed the government claiming a mandate to “repeal and replace” that law. There were numerous cited pain points: A clumsy rollout of the online exchanges in 2013, escalating premiums and deductibles as insurance companies found the high-risk pools difficult to manage, and eventually entire markets losing coverage options.
Despite all that, however, insurance companies were able to avoid association with many of the setbacks. The Harris Poll, which tracks brand equity, says that health insurance “is on a slow incline” over the past five years. In fact, while the insurance sector overall experienced a recent jump in equity this past year, health insurers hold three of the top five spots in the industry, Harris reports. The American Customer Satisfaction Index also found a 4.3% increase in satisfaction with health insurance companies from 2015 to 2016, second-best in financial services to banks.
As costs have risen this decade, consumers largely found other targets for their ire. More than 70% of Democrats in a Politico-Harvard poll last year identified pharmaceutical companies as the leading driver of increased health care costs, while more than 60% of Republicans blamed the federal government. That’s a big switch from another Harris poll in 2008, which found insurers three times as likely to be blamed for rising health care costs as either of those institutions. Stories of insurance companies denying customers certain treatments due to pre-existing conditions or other esoteric policy language were popular in the media.
So as the Senate debates its version of a health-care reform bill – a revised version of which was released Monday – should insurers support it? The insurance industry’s reputation has been buffeted by the ACA – sure, denying coverage based on pre-existing conditions was made illegal, but at least it isn’t happening any more. While insurers have reported losses on the ACA’s exchanges, that has been attributed by the public to government meddling or drug-company greed. But there are some land mines in the GOP draft bill for insurers to watch out for that could push carriers right back into the negative-press hole.
Right off the bat, the revised version of the bill imposes a six-month waiting period on consumers who buy insurance, if they had a gap of 63 days or more in the previous year. At a time when the industry is first and foremost focused on customer experience, is a half-year wait for new customers to be able to use their coverage a good idea?
Then, after that waiting period, there’s the question if the policyholder bought the right coverage. Soon, states can seek waivers for essential health benefits. That is good for consumers and insurers, to an extent, because products can now be more flexible in what they cover and can be cheaper for people who choose to assume more risk on their own. But if there’s one thing I’ve learned after being in this business for nearly a decade, it’s that most consumers simply don’t understand how insurers compute risk and how that matches to a policy. I can’t tell you the amount of times people have told me about a scandal I should be writing about that basically comes down to fundamentally misunderstanding the product.
Next, insurers will receive a large amount of federal subsidy to shore up the exchange-based plans. That’s also good for consumers (who may be able to benefit from reduced premiums and deductibles if the payments are made in a timely manner) and insurers (who can keep serving a larger market), but optically, it doesn’t sound great. Insurers make billions in profits each year – thanks to savvy investing and risk-management practices – and it may not seem like they need the subsidies. But consumers don’t look at actuarial tables before they hit Twitter.
Finally, the new framework makes insurance cheaper for younger people and more expensive for older people. While that does make sense logically, since older people use more health-care services, it isn’t going to feel good when consumers grow up with larger jumps in health-insurance costs than the more gradual trends of the past several years. In addition, some younger consumers are going to see their older loved ones grapple with increased costs at the end of their careers.
At this point you may be wondering whether or not I think insurance CIOs and other carrier execs should oppose this bill. Maybe you’re expecting me to excoriate Anthem, which is reported to have “endorsed” the Senate plan today. It should be noted, though, that the company’s statement doesn’t extend beyond the additional funding granted to shore up exchange plans, as well as the elimination of a tax on health insurance plans that the company believes should drop premiums up to 5%. Anthem clearly does not believe, nor should any insurer, that this solves all the problems with health care access in the country.
The upshot is this: How consumers view the health-care industry overall, how they view insurance specifically and what solutions they favor are much more based in emotion than reason. That means that no matter what comes out of this arduous process, insurers should internalize the lessons of the past few years and realize that their customers are out for blood if things don’t go their way. A focus on empathy and education and on finding the best solutions for customers must be prioritized. Hiding behind what the government allows, or what’s best for shareholders, can’t be the answer if customers report real hurt. That will only lead to a regulatory yo-yo, with new governments responding to the loudest voices of the time, which will not allow carriers to take on the innovative projects, like the use of wearables or data-driven prevention initiatives, which the health-care system desperately needs to reach the next level of service.
Certainly insurance companies can be an important piece of the future of health care in the U.S. Therefore, it is incumbent on the industry to carefully evaluate each move within the evolving regulatory framework, and not make massive initial changes that threaten customers’ livelihoods.
Register or login for access to this item and much more
All Digital Insurance content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access