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Expect a few missteps as provisions phase in over time
The biggest challenge facing insurers as they implement the provisions of PPACA will be moving from a wholesale, business-to-business model to a retail, direct-to-consumer model.
“It won’t happen overnight,” says Ceci Connolly, managing director of PwC Health Research Institute. “I don’t mean to suggest that in 2014, the employer market disappears, because it doesn’t, but over time that is how Americans will purchase their healthcare.”
To prepare, insurers must develop a sophisticated understanding of these customers and the types of products and services they want, as well as, how they want those services delivered. Some people might want wellness plans and gym memberships, while others will want purely medical procedure coverage with high deductable levels.
“It will be important to understand the different slices of the population and how you reach them, enroll them and engage them,” she says.
Traditional insurers must also prepare for the stiff competition they face, as other entities move into the arena.
“We at PwC see opportunity for many organizations,” Connolly says. “There will be millions of new customers shopping for healthcare with federal subsidies. We estimate that 86% of the exchange customers will have subsidies. So, there is real money to be made from this newly insured population.
“At the same time there will be challenges. We don’t yet know the details of their health status. We don’t yet know how hard it will be to get them to engage in their own health and wellness. These are some of the big unknowns,” she continues.
There could be an initial spike in provider visits for individuals who have not received medical care for some time, but that should settle out as people learn to manage their conditions. Since there was a decline in office visits in recent years with the recession, some providers will welcome new patients.
“The median age of the exchange population in our analysis is age 33, and the average 33-year-old still does not have monumental medical problems,” she says. “The more important thing for that age group will be getting them in for checkups and screenings to see what could be percolating, so they can monitor it as they go forward.”
Insurers also will need to manage the sicker outliers, so they want to attract the “young invincibles”-young, healthy adults-into the pool to spread the financial risk.
Many business owners, who have spent the last few years navigating their companies through tough financial times, aren’t prepared for PPACA and educating them will be a challenge.
“Health reform felt far off, but now, it is almost here, so this is the time to focus in on these things. The good news is there are a lot of resources available, and there is still time to put in place the smart strategies,” she says.
If there are a few missteps, Connolly believes that enforcement will ramp up slowly, because the government recognizes that it will take time to enact all of the provisions.
“I don’t think there will be an emphasis on punishing someone who is in good faith trying to navigate this brand new, complicated, confusing law,” she says. “The idea is to help everyone understand it and navigate it.”