With 2013 coming to an end, we’re about to enter the first year where the public will truly begin to experience a new era for healthcare in the U.S.
While the current administration in Washington keeps moving the dates on certain aspects of the Affordable Care Act-- the employer mandate, the individual mandate for some groups of people under a “hardship clause”, the final-final due date for the uninsured to sign up for health insurance-- the ACA will be felt across the healthcare landscape in 2014.
Impact on Consumers
While many underserved consumers will gain access to health insurance with cost offsets through subsidies and credits, many among the middle class will see increases in premiums and copays, with an even greater surprise in the form of significantly higher deductibles.
Impact on Employers
Employer provided insurance will continue be a valuable benefit for millions of consumers, but it may only be a matter of time before this disappears for many people.
When the average cost for an employer to cover a family is $16,000, but the penalty for transitioning employees to the Health Insurance Exchanges is only $2,000 per employee, many companies will struggle with the economics of continued coverage in a highly competitive marketplace.
We’re already seeing this unfold as Walgreens moved its employees to the Exchanges, and IBM has dropped coverage for its retirees. It's only a matter of time until other companies follow suit.
Impact on Providers
Healthcare providers will also feel the pressure, as reimbursements decline for Medicare and Medicaid patients, especially as Medicaid enrollment grows under the ACA. The Physicians Foundation found in its study that nearly 60% of physicians feel negatively about the direction of healthcare in America under the ACA.
While the federal government pays 100% of the coverage costs for uninsured enrollees into Medicaid for the first couple years, this decreases in the out years, and states-- who are already financially strapped-- will need to find a way to pay for its share of coverage.
These funds will necessarily be redirected from other investments such as education and infrastructure, or result in increased taxes.
Math is math.
But There is a Bright Side
First and foremost, there are millions of Americans who will now have access to health insurance, who had previously gone uninsured.
People with a pre-existing condition cannot be denied health insurance, and while this may be actuarially complicated if “young invincibles” opt for the minor tax penalty instead of paying for full health insurance to offset this risk, it should relieve anxiety among consumers who were denied insurance in the past.
Access to health insurance is not the same as access to care.
If the number of physicians declines as the insured population increases, the wait time for a doctor appointment will increase substantially. This represents a big opportunity for in-store retail clinics and walk-in urgent care centers for non-life threatening health issues.
Speaking of retail, these stores have an even greater opportunity to cater to self-care among shoppers.
The best insurance is to not get sick, and Food, Drug, Mass, Club and online channels can assist shoppers in healthy living, preventative behaviors and education in driving wellness. The wellness trend has been growing over the past decade, and this should accelerate as consumers realize short-term benefits to healthy living… it won’t just be about longevity and vitality, but also about saving copays and deductibles.
Prevention is good for both the individual and society as a whole.
The ACA also incentivizes medical outcomes and patient satisfaction, rewarding healthcare providers for better care through Medicare STAR and Accountable Care Organization (ACO) ratings instead of reimbursing strictly by throughput.
Closing care gaps and shifting focus toward outcomes versus process should be a good thing, and this Pay for Performance approach may be a real step toward needed healthcare reform.
Differentiating in a Commodity Marketplace
The ACA drives standardization among health insurance plans in what they must offer at each tier (Bronze, Silver, Gold, Platinum) of coverage on the Exchanges.
If competitors’ products must be standardized, differentiation must come from services, value add, and brand equity. A health insurance company (or hospital, retailer or product manufacturer for that matter) must appeal to consumers’ needs and desires on an emotional level.
Past articles posted on this site in 2013 provide examples of consumer insights and psychographic segmentation. Leveraging these insights can differentiate a healthcare organization in a commodity marketplace.
Appealing to the hard-wired motivations of different consumer segments can drive desired behavior, even when the product offering is undifferentiated.
c2b solutions looks forward to 2014 and helping our clients succeed in this dynamic healthcare environment!