You may have read my recent post on Oscar, Inc., a startup company on New York's health exchange. Oscar is trying to appeal to individual insurance shoppers by offering unconventional benefits such as free 24/7 televisits and generic drugs.
But how will individuals actually choose in a retail insurance market?
Consumers care a lot about price—to an extent
The latest Kaiser Health Tracking Poll found that 54% of individuals purchasing their own insurance would prefer a narrower network that costs less, while only 35% preferred a broader network that costs more. But there’s a clear segmentation of preferences by age and income, as shown here:
And substantial percentages of people changed their minds when the trade-offs crossed a threshold—for example, if a narrow network excluded their regular physician or hospital.
Over the next few months, we will begin to get a clearer picture of consumer choice as more state and federal exchanges begin releasing enrollment statistics. But in the meantime, we have a wealth of information from defined contribution, "exchange-like" platforms that have been operating for years, such as the original Massachusetts Health Connector or the Federal Employee Benefit Health Program (FEBHP).
Exchange capabilities will influence individual choice
Plan design will matter a lot. But so will the mechanics of the exchange platforms themselves. As we’ve learned from behavioral economics, changing small details in how information is presented on an exchange can lead to sweeping shifts in what factors are most salient to individual shoppers.
For example, most exchange platforms today don’t provide integrated provider directories that allow users to search for which networks contain their physician. However, a few platforms do, such as Consumer’s CHECKBOOK, which provides the exchange platform for the FEBHP. It offers the option of excluding plans that don’t include the user’s physician—potentially eliminating some options off the bat.
And its platform may eventually become the standard for the federal and/or state exchanges.
In the private exchange space, as large benefit consultants (Aon Hewitt, Mercer, Towers Watson, BSwift), insurance companies (Aetna, WellPoint), and independent startups (Gravie, Connecture) all launch their own exchange platforms, understanding how they are designed and which ones will dominate will be key to predicting how consumers will choose.
What does this mean for providers?
An individualized insurance market will create new competitive pressures and consumer demands for health plans. This, in turn, will trickle down in the form of new demands for providers.
In such a tumultuous environment, provider growth will depend on both assembling attractive networks and capturing the value from individuals choosing their network.
But how exactly will at-risk consumers shop for coverage and care in a retail health care world? What will the rise of public and private exchanges mean for provider business models? And how does population health support your growth strategy in a world of narrow networks and individual choice?
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