- What Healthcare Reform Is going to Mean
By Joe Giordano
In the next few months, insurance companies across the country will have to start thinking differently. As we approach 2014, each of the 50 states will be preparing their health insurance exchanges, and regional companies that once had a lock on specific territories are going to have to face competition from companies who have opted into their state’s exchange.
This will open up competition, and competition forces everyone to think differently. The new state exchanges can have any number of insurers added to them, so for Insurance companies the decision is whether they want to remain the regional player or remain a national player. Whatever they decide, they need to look at their marketplace as being nationwide, even if they choose only to participate in certain exchanges. I think we are going to see that most of the insurers are going to want to go to this national scale and to do that, they need to have an insightful understanding of their segmented target consumers.
“…this is a law that regulates the method of paying for a service that the class of people to whom it applies are either consuming– … Or — or inevitably will consume.” ~Solicitor General Donald B. Verrilli Jr.
Healthcare and Health Insurance is now a Consumer Package Good:
Health Insurance will no longer only sell group policies to business owners. Some businesses will eliminate health insurance as a benefit and increase salaries to partially offset employees purchasing their own insurance plan from anybody they want. This will happen in the next 3-5 years, driven by the significant cost savings for business owners not having to fund “Cadillac plans”. And, the marketplace will open up to almost everyone–as over 90% of the populace will be required to have health insurance by 2014.
Health Insurance will be a commoditized product, with the potential of having as many options as there are toothpaste brands. Insurance companies will have to differentiate their products, just as if the consumer was looking at the aisle in their local grocery store. And like all consumer goods, they need to take a deeper look at the motivations and behaviors to get their target consumer to choose their products.
As consumer product companies, they need to look deeply at product development, branding, positioning, naming and product claims. The practice of creating products based on actuarial tables and where they can create the most leverage of their customer base, using math to make money will be overshadowed by the 4 p’s of marketing, price, product, promotion and placement to attract consumers.
And these consumers are going to be real finicky. Keep in mind, we are not looking at the consumers who currently have health insurance, we are looking at the millions of Americans who do not have health insurance right now or who are underinsured. They are going to be able to purchase insurance from any one of these large insurers across the United States. Under the new model, a company from the Northwest will be able to sell to somebody in Florida. That company from the northwest has a market place that looks a lot different than their current consumer segments.
To be successful in this Open marketplace, health insurance companies need to actually understand their consumers better. A new approach is needed to target their consumer and to really understand the unarticulated needs, wants and beliefs of the consumer to:
- Create products and services that meet those needs,
- Meet the needs on how the consumer actually wants to learn, shop, and purchase for the correct health insurance plan for themselves or their family.
It takes a 360 degree view of the consumer to do this and to apply traditional consumer marketing and product methodologies to the Insurance business. It will take new skills, new thinking, and new project methodologies of these Insurance companies that they traditionally haven’t needed. It will be a large scale shift from Business-to-Business to Business-to-Consumer across the country; some will wither and others will thrive.