ACA Profitability: Act Now
The Affordable Care Act (ACA) is ending its second open enrollment period with the government reporting over 11 million enrolled and the uninsured rate at its lowest point in seven years. As health Plans come up for air, they are now able to have a more informed perspective of their new and renewing customers.
With the elimination of medical underwriting and the increased likelihood of limited relief from the 3-Rs (risk adjustment, reinsurance and risk corridors), profitability levels for this business segment are under extreme pressure. In many instances insurers are incurring significant losses.
In order to return an Individual business segment to profitability, marketers have a more critical role than ever. They must not only continue to hit enrollment numbers but now must also hit the necessary customer engagement goals. For example:
- Improve prospect based targeting to win a disproportionate share of desired “most valuable” customers and thereby improve the risk mix; either by penetrating the uninsured or wooing select switchers. In addition, considerable thinking needs to be placed into managing the existing portfolio of products to ensure a best fit from both a consumer and company perspective.
- Activate newly acquired members as soon as they enroll with the proper care management resources to help lower their overall claims expense. This will require tighter relationships with care management and improved customer facing communications.
- Create a differentiated, more personalized and engaging customer experience to retain high LifeTime Value customers. In order to accomplish this more data, analytics and technology investments will be needed.
A three step approach yields big results:
- It all starts with the data. Combining and analyzing third party consumer data combined with your brand’s unique member data allows Plans to profile their different consumer segments. The result are insights into who is buying your product and who isn’t, where they are buying it (on v off exchange) and how likely they are to engage with you in their health.
- Review past marketing results. With an eye towards understanding what types of prospects have been attracted to your Plan during the past two enrollment cycles, you’ll have a better understanding of which campaigns have been effective and if there are significant differences in the type(s) of consumers they have attracted.
- Identify optimization opportunities and gaps across the member lifecycle. Gaps can be categorized into one of four types: Communications, Process, Data/Analytics or Technology. The lifecycle phases to evaluate are:
- Acquisition: Use data and analytics to identify the most desirable prospects and those most likely to respond to an offer for insurance. This targeting effort improves the influx of new (and better) risk into the health plan, often at a lower acquisition cost.
- Activation: Once a prospect transitions to becoming a member, proactively identify the risk characteristics of new enrollees. For example, as part of the on-boarding and new member welcome process make sure to have an effective strategy for completion of a Health Risk Assessment. This is critical so that care management is engaged earlier to reduce cost and to ensure that the proper risk coding is complete to maximize government reimbursement.
- Retention: As members prepare to go through the renewal process, examine communication touchpoints, product and price options. A key to success is to focus on personalization and customization of the renewal experience based upon the risk profile. For example, are high and low utilizers treated similarly in terms of types of message, frequency and urgency? If so, change it!
Growth and profitability can co-exist under the Affordable Care Act. It takes the marriage of data-driven customer insights and direct-to-consumer marketing discipline. Taking data and turning it into structured information that can be interpreted to inform and create an actionable ACA strategy can be a powerful weapon in today’s competitive landscape.