A consumer revolution in healthcare coverage

Health insurance is about to witness a consumer revolution. Promises of Amazon-style online experiences for individuals shopping for health insurance will be put to the test in 2013, when 12 million people are expected to enroll in insurance exchanges.¹

In actuality, this revolution is more like an evolution. The 18% rise in high-deductible plans from 2011 to 2012 has pushed more consumers to feel the financial pinch.² Consumers are also demanding a greater say in how they spend their healthcare dollars, and that, along with the development of state insurance exchanges, is prompting the industry to compete differently. Healthcare consumers can expect to see a shift in the marketplace as insurers borrow three key practices from the retail industry.

Convenience

Nearly 40% of consumers surveyed by PwC’s Health Research Institute (HRI) said they would purchase insurance at a private insurance company retail store.³ Insurers such as Florida Blue and Highmark have opened shops to supplement their online presence.^4,5 From a consumer perspective, buying health insurance—and perhaps participating in wellness programs—at the local shopping center is very convenient. PwC’s national Experience Radar survey found that 40% of retail consumers want shopping options, whether it’s online, via phone or in stores.⁶

Insurers are also partnering with retailers to bring healthcare products to where the consumer is. Costco, for example, which sells health insurance for small businesses in some states, recently began offering store members a choice of individual health plans through Aetna.⁷

Transparency

Consumers have trouble assigning an accurate value to their insurance; in fact, an HRI consumer survey found that nearly one-third overvalued their individual coverage by more than 65%.⁸ As consumers begin enrolling in the exchanges in October 2013, expect them to demand clear, simple information on prices, provider networks, and quality.

A recent HRI survey found that in addition to an easy-to-use website, 72% of consumers want a cost comparison tool to select insurance and 64% value products that match their needs and preferences.¹⁹ States are responding to transparency demands with such efforts as Enroll UX 2014, a public-private partnership that has designed a prototype online site for state exchanges.¹⁰

Customer insights

Retailers tap analytics on consumer buying patterns to stock shelves, create targeted advertising and build customer loyalty. Insurers such as Blue Cross and Blue Shield of North Carolina (BCBSNC) are investing in data analytics to personalize care management through targeted messaging. For example, predictive data will be used to identify the best methods for communicating with members about preventive care options, such as flu shots.¹¹ The data would also allow BCBSNC to identify diabetic members who prefer more self-care resources versus those who want more direct counseling.¹²

Implications

• Consumer expectations for flexibility and transparency should spur insurers and employers to offer intuitive navigation assistance and better comparison shopping tools.
• As the retail convenience of coverage grows, providers can also expect to see a continued increase in the use of retail clinics as consumers seek lower cost options for minor ailments. Consumer use of retail clinics rose from 9.7% in 2007 to 24% in 2012 according to HRI consumer research.
• With price-sensitive customers and a competitive generic drug market, pharmaceutical companies can enhance brand loyalty through patient assistance programs such as drug discount and coupon programs.