Tuesday, October 7, 2014

Public Exchange Open Enrollment Part II Will Test Health Plans’ Pricing, Marketing


Reprinted from HEALTH PLAN WEEK, the most reliable source of objective business, financial and regulatory news of the health insurance industry.

By Patrick Connole, Managing Editor

September 29, 2014Volume 24Issue 33

Last time out was a disaster. This time will be different. That is the hope of health insurers as they prepare to implement strategies for the second public exchange open-enrollment period beginning on Nov. 15 and running to Feb. 15, 2015. What health plans and strategists expect this time around is a more nuanced, knowledgeable approach to how things work, from how plans are priced and marketed to consumers to how education efforts are conducted. The disaster of last year’s open-enrollment period was technical in nature, out of the control of health insurers; this year’s focus will be on “normal” business issues, market watchers say.

Part of that new normal will be more insurers. HHS has said that a full 25% jump is expected in insurer participation, which is simply “amazing,” according to Paul Lambdin, national leader of exchanges and retail practice leader for Deloitte Consulting LLP. “That’s a big increase,” he tells HPW, saying the jump in players is indicative of the growing stability of the marketplaces, in part validated by UnitedHealth Group’s strategy to increase its entries from just five exchanges in 2014 to two dozen in 2015. “United decided to jump in this year in a much bigger way,” Lambin says.

In raw numbers, HHS said participation in the 36 federally facilitated states is expected to increase from a combined 191 insurers in the 2014 enrollment period to 248 in 2015. Eight of the states managing their own exchanges will have a combined 67 insurers next year versus the 61 active in 2014. Those numbers do not include counts for state-run marketplaces in Hawaii, Kentucky, Massachusetts, Minnesota and Vermont, along with Nevada and Oregon. The final two states plan to join HealthCare.gov after suffering debilitating technical problems during the 2014 open-enrollment period.

Exchange Plans Are Finalized

More intense insurer interest should help contain prices, considering that HHS has estimated that every new insurer participating equates to 4% lower premiums for people in that region.

Insurers Consider New Strategies

Since this is the second time around for most insurers, this open-enrollment period will feature plan offerings designed to appeal to consumers’ tastes as indicated by their 2014 selections. BlueCross BlueShield of Tennessee, for instance, says it will be throwing out some plans and replacing them with others. “The plans themselves are not dramatically different. But we took a dozen off that didn’t seem to sell as well and added back a dozen or so we think might do better. Overall, it is pretty much the same portfolio, but we learned people like zero-premium type things [for instance],” Henry Smith, senior vice president and chief marketing officer for BlueCross BlueShield of Tennessee, tells HPW. There will also be renewed efforts to market coverage options to younger people and to Hispanics, he adds.

Rosemarie Day, president of Day Health Strategies, tells HPW that she expects most returning plans to stay the course in 2015, and agrees that new entrants increase competition and could help lower prices. But she cautions that some markets could get to the edge of overwhelming consumers with too many choices. Day also points to new Medicaid-oriented insurers coming to exchanges as a possible avenue for enrollees to find more affordable options. As for returning enrollees, price will likely determine their decision-making. “As long as there is not price shock, they should re-up….[Consumers] generally take the path of least resistance,” Day says.

Lambdin expects insurers to put a “little more force behind outreach” this open-enrollment season, having learned that exchange customers are sometimes hard to reach, need plenty of education about health insurance and, despite being in an online marketplace, want in-person help. “[Plans were] somewhat surprised last year, since it became very important to have that personal touch. So I think there is a new appreciation to not be overly reliant on social media and online, and instead pay attention to broker networks, for example,” he says.

Indeed, Smith says the Tennessee Blues plan is making face-to-face marketing a big part of its efforts, driving a mobile van across the state to educate and explain exchange offerings and health insurance in general, as well as operating a consumer information center designed for outreach purposes. Even though many consumers are tech savvy, they still want that in-person experience, Smith adds.

Lambin says plan designs seem pretty stable for 2015, with insurers focused mainly on getting networks in place. “For plan designs, there is not much new going on there, with talk broadly still about creating the right price point to compete without really knowing where other plans will be. It really comes back to the right network design….Plans are laser-beam focused on getting the geography right,” he says.

The way insurers have looked at exchanges is over a three-year window, Lambdin says. “They set first-year prices not knowing anything in a brand-new market, making a lot of assumptions on small group or individuals,” he says. “And they are really making second-year rates on another set of assumptions. So there will be enough noise out of the process in the third year, and insurers can say, ‘we feel good, we priced to break even, and did so to the best of our ability.’”

Tweaks, Not Major Changes Are Coming

Anna Nielsen, spokesperson for SelectHealth, the insurance arm of Intermountain HealthCare, tells HPW that she expects the low-cost service areas of Idaho and Utah in which the carrier operates to remain so for 2015. “Overall, SelectHealth is offering an array of plans designed to meet the needs of our community. To help consumers to compare plans, we offer consistency between plan benefits wherever possible. In addition, pediatric dental benefits are embedded into plans offered in Utah,” she says.

Alex Kepnes, a spokesperson for Humana Inc., says the insurer intends to participate in exchanges in 15 states for 2015. “There is still a strong need for basic information and education on health coverage. The more knowledgeable people are about health coverage, the more empowered they are to make smart choices about their unique health needs,” he says.

In Nebraska and Iowa, CoOportunity Health says pricing is always a factor for consumers, regardless of the number of competitors available. “In Nebraska, there is one new player that is priced highest in the market and one who has come off the marketplace (Health Alliance) so we don’t expect much change,” says Leigh McGivern, spokesperson for the insurer. CoOportunity, a Consumer Operated and Oriented Plan (CO-OP) created under the Affordable Care Act, bested its initial business projections in its two markets (HPW 2/24/14, p. 1).

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