Package products for new markets

December 1, 2009

New plans are entering the market in spite of the uncertainty

NATIONAL REPORTS- Even with major industry changes looming, new players are entering the managed care market amid the uncertainty. Experts believe the strategy has promise.

"All the stuff being promoted in the reform language is what we've been planning to do the last three years," says Martin Watson, the CEO of SeeChange Health, the first new insurance company to launch in California in 20 years.

Watson says SeeChange, which offers a product for small businesses designed to reward proactive health management with reduced premiums and copays, can adapt to changing legislation.

"Sometimes it easier to come in fresh than to adapt," Kleinke says. "Big insurance companies, such as WellPoint or Anthem, are all good, but they operate gigantic organizations with an older workforce that has been doing the same old thing since the '80s. Sometimes it's easier to teach new dogs new tricks."

To become the organization of choice in the healthcare world, Kleinke says, companies will need to be innovative. The rules are in flux, and the leading success factor is going to change under a reformed system. The landscape will likely depart from medical underwriting and move toward delivering good quality service for a competitive price.

"It's not going to be who can avoid risk or who can avoid sick people," Kleinke says. "It's going to be those that take all comers. There are tons of people who are terrified that they are going to get cancer, who will be happy to write a check to someone that hasn't been screwing them for the last 10 years."

Insurance companies stand to gain millions of customers if they play their cards right. According to the U.S. Census Bureau, nearly 47 million Americans under the age of 65 were without health insurance in 2008. Once healthcare reform is enacted, the uninsured will be driven into the market with subsidized coverage, says Kleinke.

With the market expanding, the products that will come out ahead will be those that become available before 2013 and meet requirements of new regulations.

"If they can package a plan that anticipates the reform era, [health plans] are going to clean up," Kleinke says. "They are going to have the momentum and the excitement of the passage of the bill. It's a great marketing pitch to somebody and their family for a company to be able to say they are the first ones to have a plan based on the new Obama reality."

It's too early to tell whether plans like SeeChange will emerge as leaders. Watson believes the key is to stay ahead of the competition.