Online product exchanges set example for 2014

May 10, 2013

Plans should consider adapting similar strategies from online product exchanges to prepare for 2014.

Online product exchanges like Amazon and eBay have disrupted and revolutionized the retail experience. From cars and appliances to music, product exchanges allow customers to compare price, quality and availability with assurance that they will be 100% satisfied with their purchase. If we took the same process and applied it to health insurance, the result would have the same potential to upend the buying and selling experience by putting the individual purchaser one click away from buying your product-or your competitor’s.

Federally facilitated healthcare exchanges are slated to be operational by January 1, 2014. By offering products that meet state and federally mandated requirements to individuals and small employers, the exchanges will provide a platform for creating complete transparency for consumers in cost, product, service and experience, and are expected to be the conduit for at least $60 billion in healthcare premiums covering nearly 20 million people. While many regulatory details are still being resolved, it’s clear that the post-exchange world will be different in many ways.

New consumers – Because many new health insurance customers will fall into the subsidy population-individuals with incomes ranging from 100% to 400% of the FPL, whose premiums will be partially or fully-subsidized through the Patient Protection and Affordable Care Act (PPACA)-it’s likely that a significant number will be new to the healthcare market. 

New provider alignments – Aside from price, which is expected to be the single biggest factor in the purchasing decision, it’s likely that for people with health issues, distinguishing one product from another may be determined by the make up of the provider network or the access to care fledgling ACOs that are expected to provide for this group.  For most of these new customers, those who do not have specific health concerns, it’s going to be something else.

New competitors – Aetna is betting that it will have access to Costco’s wide array of products and services as they are currently testing an exchange-like product in a number of states that combines health insurance with the popular low-cost retailer. Target, Walmart, Walgreens and a number of other retailers are considering similar partnership opportunities. Apple has already revolutionized the music, cellphone and computer industries. For consumers under the age of 30, a health plan combined with one of the Apple products or services might have great appeal.

Time is running out for getting your organization’s approach to the exchange market in place. The most successful products may be very different from the current top-selling insurers.