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Health Plans Scrambling to Upgrade, Keep Up with Changes

By Gregory A. Freeman  
   July 05, 2017

The potential for further healthcare reform is only one aspect of the fast-changing landscape for health plans. Insurers are also facing significant upgrades in technology and human resources.

The biggest challenge for health plans now is the need to stay agile and to have the people, processes, technology, and systems that can respond to the constant changes in the healthcare insurance industry.

Insurers are scrambling to keep up with legal and societal changes that upend everything they have known in past years, says Harry Merkin, vice president of marketing at of HealthEdge, a company providing software management for payers.

They are being forced to modernize in costly ways that could affect their overall financial health as much as anything that happens to them in the insurance market, he says.

"For decades health insurance was pretty straightforward, one size fits all. It was a bunch of actuaries in a room figuring out probabilities, and people getting sick or dying. Now there are so many permutations of different types of insurance, and the rise of consumerism has people much more aware of the type of insurance they're buying, even through an employer," Merkin says.

"The result is that the health plans have to be able to flex quickly in response to both regulatory changes and consumer demands."

Health plans relying old systems–both technological and organic (state of mind)–are struggling to keep up, he says. Many insurers have managed to put off billions of dollars of costs in technical upgrades and improvements in human resources, but they can't wait much longer, Merkin says.

"We've actually seen examples of CIOs buying parts for old mainframes on eBay and keeping COBOL coders on staff to keep the old systems chugging along, preserving them as long as possible because it is a big investment to modernize," he says.

"But now the incentives for modernizing are much stronger, especially with the influence of Medicare and Medicaid rolls growing every day. Their size exerts a lot influence on the government tends to change things on a whim, not just legislative changes but even things like CMS guidance on enrolling a new member."

Gregory A. Freeman is a contributing writer for HealthLeaders.

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