The Patient Protection and Affordable Care Act (PPACA)envisions the formation of "State-based Exchanges to create competitive, transparent, accessible, and affordable options for health insurance. Healthcare payers compete on cost while adhering to the consumer choices. With an estimated 29 million individuals potentially to be enrolled, majority being individuals and small groups, healthcare payers need to continuously innovate to offer basic products/services that are highly price-sensitive. Designing of these exchanges is of utmost critical nature to move into a sustainable marketplace, maintaining separate risk pools across individual and small group markets and creating effective risk adjustment mechanisms.
So what's different in Exchange based selling/outreach? As we look at answers for some of the game changing rules here, some key observations/findings that emerge are a) Product differentiation is less. b) Almost all benefit plans are standardized/commoditized c) Pricing is key - cannot be significantly high - has to remain competitive d) Quality / Performance Measure e) Customer experience. As customer expectation continue to rise, more and more Healthcare payer executives believe that gaining cost Leadership & customer experience will make their organizations unique, in a marketplace where they have to decide which customer segments to target and then build new capabilities to reach them.
As Health plans traverse through this journey, it will force healthcare payers to transform/innovate to meet the needs of a price-sensitive segment. Some of key business value drivers/critical lessons that will enable them to transform into a consumer-enabled enterprise area) Adaptability to consumer needs b) Consistent consumer experience c) Investments that are scalabled) Differentiated products/services - personalized choices e) Interoperability- business aligned architecture f) Data based insights for consumers. These findings also lead to many more critical questions for health plans: How does one create positive revenue? Can exchanges provide a source of sustainable margins? Will exchanges attract adverse risk? How much volume will they generate? How can data sharing be governed?
While one waits for these answers, needless to say to compete in this exchange model, health plans need better analytics, enhanced retail capabilities, redefined corporate functions, and a lower cost operating model to compete in a price-sensitive market. Health Plans would be looking at "Investing now in at least a handful of essential capabilities given the lead time necessary to develop them. Exchanges aside, the health insurance market will continue to become more retail-oriented.