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Individual Health Insurance Markets That Work, Part One

 |  By jfellows@healthleadersmedia.com  
   November 13, 2013

After a trip to Singapore, New Zealand, and Australia, the chief marketing officer of a Massachusetts payer discusses success factors for the direct-to-consumer markets she observed in her travels.



Debbie Gordon, Chief Marketing Officer, Network Health

Back in July, Deborah Gordon, vice president of business development and chief marketing officer for Medford, MA-based Network Health, a nonprofit health plan covering 215,000 state residents, set out for Singapore to find what she could learn from their experience with consumerism in the health insurance market.

As the recipient of one of nine 2013 U.S. Eisenhower Fellowships, Gordon also traveled to two other countries, Australia and New Zealand, to continue studying her chosen topic, consumer empowerment in healthcare, over the five-week fellowship period.

Now that she's back, Gordon says the biggest lessons she learned about how consumers bought health insurance came not from Singapore, but from Australia.

HLM: What were the big takeaways for you after visiting Singapore, New Zealand, and Australia?

Gordon: I learned so many things. One, all health systems are in transition. The premise of my trip was that the U.S. is on the precipice of a major transformation in many ways between the market forces, the ACA (Patient Protection and Affordable Care Act), and the cost pressures that we're facing in the industry.

I thought, 'I'm going to go to some of the world's best performing health systems to see what they have figured out.' And while I was there, I realized that they, too, were at points of transition. All systems are in transition, and the best ones move on purpose. They're constantly looking for ways to improve to adapt to new conditions and new challenges.

Our health system certainly is in transition, and it always will be. And we should ask how we [can] deploy continuous improvement techniques within a mindset of constant change and improvement to make our system better.

A lot of people said, 'You could never do this in the U.S. because it's so big.' People get a bit overwhelmed with our healthcare system. It's big, it's complex, it's layered, and I think that can be an obstacle to making improvements.

The countries I visited are relatively small, and I realized they could do things because they are small. Their systems have some ability to make change at a national level that we perhaps do not, as easily. What I tried to do when I was in those conversations was think about the right level of where we could making something happen. The broad lesson was we may have to start small to make change.

HLM: How does culture influence healthcare?

Gordon: Culture has so much influence on how we implement our healthcare system. In Australia, for example, they call themselves pragmatists. They are not super politically ideological. It was described to me as a fight for the middle in Australian politics, and a general nature or culture of finding solutions. They would talk about health system reform in those terms.

They also couldn't quite understand the controversy over the ACA. I would explain that it's a political dynamic that we have. In Australia, their politics are less extreme, and so what I found was a general confusion about why we couldn't get certain things done in the U.S. And maybe that's part of their success, that they put politics aside.

HLM: Where do you see opportunity for the U.S. from examples you saw in the countries you visited?

Gordon: What I saw in Australia was a working consumer market for health insurance. For example, I landed in Sydney, went to my first meeting, which was with the Director General of the Health Department of New South Wales, and then left. It was a beautiful day, and I had flown across the world and felt a sense of accomplishment, and while walking down the street in Sydney, I realized I was looking at health insurance stores.

Fifty percent of their population buys private insurance. The government really wants them to buy in to relieve the financial pressure on the public system. But then there is a whole industry that knows how to sell, service, and market to individuals. There is almost no role for employers. Employers might be a marketing channel, but virtually no one gets their health insurance through their employers, except for expats, that's what I was told.

It's very timely. Putting politics aside, we can all agree that the Healthcare.gov implementation has been sub-optimal. Where you stand on the political spectrum affects how you interpret that failure. Some people are saying, 'See? That's why we shouldn't have this legislation,' and others are not worried about it.

What I would say, based on what I saw in Australia, is it can work, it does work. I think a lot of people have dismissed that we (U.S.) could have a working market for health insurance. But, the fact is there is a country, not that dissimilar to ours… that has in its mix a thriving health insurance industry that serves individuals.

You walk down the street and you see retail locations to transact with your health insurance company. They're promotional in nature, so the signs are for mature consumer marketers. It's something the health insurance industry in the U.S. is on the cusp of, and in Australia is a working example.

HLM: For Network Health, how realistic is a retail model?

Gordon: We are actually setting up a retail presence in Worcester, Mass. We are partnering with our parent company, Tufts Health Plan, which is a large commercial and Medicare Advantage insurer.

We do believe collectively people will want to see us face-to-face, and that we can add a level of service by being on the ground in a retail presence. Will we have a storefront every few blocks in the city of Boston? No, but we are trying to be creative and resourceful. I think the point Australia makes, and shows, is that it is a complex purchase and people do want some human contact.

HLM: A key part of making the insurance exchanges affordable in the U.S. is having a large number of young people enroll to spread the risk, has Australia also figured that part out as well?

Gordon: Yes. They use a mix of carrots and sticks to encourage people over a certain income [level] to buy health insurance. It's completely optional; there's no mandate. If you do not buy in, you pay more in taxes, and if you buy in before age 31, you pay a lower premium for the rest of your life. They call it a premium load factor, and they've created a dramatic incentive.

HLM: Are health insurance exchanges in danger of losing their status as a game changer as a result of a rocky launch?

Gordon: I think if the train hasn't left the station, it's about to. I really do think the concept of a marketplace should be apolitical. We see marketplaces in every other industry, even complex ones like other kinds of insurance, banking products, and the travel industry. It's technically challenging but solvable. The marketplace for health insurance reflects the way we buy other things, and I just don't think you put that back in the bag.

Next week, in the second part of our conversation, Gordon continues to describe the health insurance business practices in Australia that she believes the U.S. could learn from, as well as the consumer health market in Singapore.

Jacqueline Fellows is a contributing writer at HealthLeaders Media.

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