In this interview, we sat down with Wellthie advisor Jimmy Lee to hear his thoughts on where the small group insurance market is heading. Jimmy is a dynamic healthcare visionary with extensive experience as a leader of several of Anthem’s multi-billion dollar divisions. He is currently a healthcare executive as CEO of SimpLee Healthcare, executive consultant with Sharecare, Advisory Boards of Wellthie and Solera Health, Board member and Treasurer of Easter Seals, and consultant for Pareto Intelligence and Leverage Health. Jimmy is the former President of the Small Group and Individual segments at Anthem, Inc, one of the nation’s largest health insurance companies.
What are the opportunities ahead for carriers to generate feasible growth in the small group market?
There is going to be a period of expanded options for small employers in terms of benefit offerings. Since ACA provisions went into effect in 2014, there have been strict regulations defining essential benefit offerings, community rating, rating relationships between metal products, elimination of industry and group size rating factors, and age rating restrictions. With those regulations loosening, we will see more variation in the types of plans available. For example, the recently announced rule to expand Association Health Plans may result in some lower rates on the market, though this will likely vary by state. There is also an opportunity for growth in ancillary offerings, wellness programs, and critical illness/accident coverage.
Some states may be more restrictive than others in terms of how much variation they allow. However, carriers can offer both ACA-type plans and others as well. Short-term plans also present an obstacle because they can be extended to 12 months, which means we may see more individuals opting out of individual/small group ACA plans. Affordability is also a barrier because there are still small businesses who are unable to offer health plans due to costs. Carriers need to continue thinking about how to lower costs so that they can tap into small businesses who are not able to offer coverage today and thereby increase market size.
What should small group carriers be prioritizing in their growth strategy today?
Small group carriers need to be ready for the idea of increased choice. They should put additional investments into new product offerings, and from a sales and distribution standpoint will need to build new and different relationships. They should also be ready for more small groups choosing self-funded plans, an option that they have traditionally avoided. All of these changes will require a good actuarial understanding of the dynamics of the marketplace in order to arrange an effective product portfolio. Other considerations are the potential proliferation of Association Health Plans and MEWA benefit offerings.
How does the changing regulatory landscape affect small business insurance?
The current administration is not going to encourage or enhance the ACA; if anything, they will only try to dismantle it. However, they do want there to be more choice in terms of benefit offerings. From a broker standpoint, having more options to advise small businesses on will make them more valuable, since more choice will make it harder for small businesses to find the right solution. Business owners will need to rely on someone to give them advice, whether that’s a broker, consultant, navigator, or someone else.
What do you think will be the biggest disruptors in small group insurance in the next two years?
As providers are taking on more risk and different treatments and protocols are introduced, carriers are going to have to adapt in terms of where their value lies. Carriers need much deeper partnerships with providers in order to be successful in value-based models. We are seeing trends towards steerage of consumers to the most efficient providers and places of service based on cost and quality of care. Carriers are figuring out how to write medical policies so that members can get services in more convenient places and to push them towards the highest quality providers, all at the lowest possible costs.
Carriers also need to figure out how to engage members more effectively. They have been trying for years to get people to engage members by providing cost and quality transparency tools on their websites, but engagement is very low. They should be thinking about other ways to promote transparency and increase communication. We are also seeing more coordination of care, and Diabetes Prevention Programs (DPPs) are a prime example. DPPs are certified programs that work on behavior change to prevent people at high risk of developing diabetes. Finally, there is a heavy push towards addressing the social determinants of health. We know that income, housing, food insecurity, transportation, and many other social factors play a significant role in health outcomes. Carriers and providers that are able to target these determinants will best be able to lower costs and improve health outcomes.
What should a digital strategy look like for a carrier in health insurance?
Digital strategies can help carriers address some of the issues I just mentioned. Carriers should focus on developing mobile models that help steer people towards providers with the best results. They can also utilize technology to motivate people to engage in health-promoting behaviors, like getting a screening or exam or making lifestyle changes through involvement in a DPP. One big challenge for carriers is that members have many different engagement points, so those that can figure out how to manage all their care with one platform, integrate Electronic Medical Records with claims data, and identify gaps in care will be ahead of the market.
How is the relationship between InsurTech startups and incumbents evolving?
There is a definite possibility for these relationships to continue growing. InsurTech startups are identifying new ways to respond to issues quicker and cheaper than carriers do now, and these strategies can provide significant value to carriers. There is a specific opportunity around engagement tools that directly link providers and individuals to one another in large group plans. There are also opportunities in concierge tools, population health management, and risk adjustment that would be very useful to carriers.
How can carriers leverage data analytics in health insurance?
Carriers can leverage data analytics around managing existing members to identify the highest risk patients and take steps to improve their health. They should be digging deeper to understand what the gaps in care are for members and what they can do to prevent avoidable hospital visits. Carriers can also utilize data analytics to understand their members’ behaviors; for example, whether they are buying gym memberships or purchasing healthy foods, and prioritize which members to put their resources towards in terms of behavior change. Analytics can also help with benchmarking providers and understanding which ones have more or fewer gaps in care for members. Finally, insurers can use data analytics to gain more insights into how people make decisions about purchasing insurance.
How can carriers market better to millennial business owners?
Carriers first need to better understand millennial business owners as a business segment and figure out how they are different in terms of their needs and wants. For example, they may want more mobile services and personalized offerings than older customers. We also know Millennials are enthusiastic about dental benefits, even if they think they’re healthy enough to go without medical insurance. Once carriers identify these priorities, they should put in resources towards attracting and retaining Millennial consumers.
To learn how Wellthie can help carriers with these challenges, contact us today.