By 2020, the retail health insurance market will include more than 100 million health shoppers wielding a whopping $500 billion in purchasing power, according to a new study from the management consulting firm Oliver Wyman. These shoppers will include millions of uninsured consumers as well as millions of employees whose employers have opted out of conventional insurance and shifted to vouchers or defined-contribution programs.
The search for health insurance coverage will take most of these millions of buyers straight to health insurance exchanges, where health plans will compete to sign them on the dotted line. But here’s the rub: The competing health plans will be similar in price because they will each cover a predetermined package of essential benefits. Thus health plans must identify other ways to differentiate their products to individual consumers.
In the new healthcare market, the consumer will be king and health plans will need to transform themselves into “true customer-facing retail organizations,” according to the report, “Winning in the World of Retail 2.0.” Underwriting and risk management—the traditional competencies of health plans—won’t be nearly as important as consumer-oriented product design, segmentation, and branding. Today, though, “health plans have little expertise in those areas,” says Howard Lapsley, a partner at Oliver Wyman and co-author of the report.
Lapsley told HealthLeaders Media that making the shift from a B2B business model to a consumer-oriented retail model will require that health plans rethink much of what they do today, from how they market their products to who they partner with. The good news is that health plans don’t need to reinvent the wheel; they just need to begin to adopt the practices of successful retailers.