Nine months following the start of open enrollment for Obamacare, officially known as Affordable Care Act, its success or failure is still largely determined by personal perceptions.
For those of you that attempted to use the federal exchange, Healthcare.gov, prior to December you likely ran into untold technical issues which may have prevented you from enrolling for health insurance. Chances are you may not have a very positive perception of the enrollment process because of these glitches. Conversely, If you signed up in January or beyond, with the exception of a few state-run exchanges such as Nevada, Vermont, and Hawaii, you likely had few technical problems enrolling for health insurance.
However, feedback from consumers... let me rephrase that... constructive criticism and genuine feedback from consumers that used the exchanges has been sparse at best. In other words, how are health exchange architects and insurance companies supposed to more effectively market their insurance plans without actionable feedback?
The good news is that J.D. Power has heeded the need for feedback and earlier this week published its inaugural Health Insurance Marketplace Shopper Study. In total, J.D. Power examined the satisfaction of 1,632 U.S. consumers that shopped for insurance on either state or federally run Obamacare health exchanges between Nov. 2013 and April 2014 in order to identity what factors drove consumer satisfaction, and what kept consumers from being satisfied during their shopping experience.
Here are the five most surprising finds from J.D. Power's survey.
1. Personalization is vital.
According to J.D. Power's shopper study, the overall enrollment satisfaction of consumers was 615 on a 1,000 point scale – a fairly mediocre mark. However, the readings varied drastically depending on how consumers chose to sign up.
Raise your hand is you thought signing up for Obamacare in person would have yielded the highest satisfaction rating (719). You can all put your hands down because your nose is growing! Conversely, the 67% of consumers who chose to enroll online were the least satisfied of all with a satisfaction of 597, a full 122 points lower than those who signed up in person. Additionally, those who signed up by phone had a satisfaction rating of 623, with the use of a navigator boosting satisfaction (631) relative to those who didn't use a navigator over the phone (611).
The main point here is that while technology is meant to streamline the enrollment process and save on costs over the long run, the exchanges need to find a way to be considerably more personable when courting consumers. These responses demonstrate that human-to-human interaction is still a more satisfying experience for most consumers, although glitches associated with Healthcare.gov could easily have played a role in dragging down online satisfaction. Accenture (NYSE:ACN), the lead architect behind Healthcare.gov, is going to have to tackle this balancing act between streamlined technology and person-to-person interaction head on in 2015 if it hopes to improve consumer satisfaction going forward and get its contract renewed this coming year.
2. Cost is still king.
High premium costs are one of the decisive factors that have kept consumers from purchasing health insurance in the past. When asked, 89% of respondents noted in the affirmative that cost was a main reason why they had been uninsured prior to Obamacare's implementation.
However, cost is still king, even after the advent of the ACA's health exchanges. Specifically, 59% of respondents noted that costs weighed heavily in their overall plan purchasing decision with doctor visit co-pay costs (36%), out-of pocket maximums (32%), and annual deductibles (32%) being the three most prominent costs that consumers honed in on.
The implication here is that insurers really need to emphasize the quality-versus-value proposition of each tier of their plans. Although platinum and gold plans have higher monthly premiums, insurers could actually see bigger profits from bronze and silver plans since it requires more out-of-pocket cash from consumers for procedures and prescriptions.
This is one reason why a smaller insurer like Molina Healthcare (NYSE:MOH) has such a good chance at success on Obamacare's health exchanges. Molina only recently ventured into the individual care market. Previously it only enrolled individual citizens and families that qualified for government assistance (i.e., Medicaid). Consumer perception of Molina as an insurer for low-cost individuals and families could transfer over favorably and lead to healthy enrollment figures as long as it continues to emphasize the quality and value of its plans.
3. Plan tier and satisfaction are correlated.
This may not come as a complete shock, but plan tiers and consumer satisfaction were perfectly correlated.
Obamacare exchanges were set up in such a way that consumers would have their choice of four plan tiers: platinum, gold, silver, and bronze. A platinum plan has the highest upfront premium, but requires the insurance company to cover 90% of out-of-pocket fees with the consumer covering only the remaining 10% (up to their annual out-of-pocket expense limit). A gold plan offers a slightly lower premium and an 80%-20% split between insurers and consumers on costs. Silver and bronze plans offer a 70%-30% split and a 60%-40% split.
According to J.D. Power, platinum consumer satisfaction came in at 766, gold at 655, silver at 621 (silver was the most commonly purchased plan, totaling more than platinum, gold, and bronze plans combined), and bronze at 556.
What caused this 210-point satisfaction swing? I'd speculate it has to do with the comfort level in paying ACA premium prices. As we learned a moment ago cost is still king when selecting a health plan. If consumers are willing to pay upwards of $400 or $500 in monthly premiums for a platinum plan then monthly costs probably aren't a big concern for these citizens. On the flipside, a consumer who believes they'll struggle to afford health insurance, or won't use it, will be much more likely to purchase a bronze plan because it's the cheapest. Chances are this shopper isn't thrilled to be looking for insurance in the first place.
4. The law trumps desire.
As much as optimists would like to believe that the majority of new enrollees wanted health insurance, a majority of respondents (50%) noted that they were compelled by the ACA being a law to obtain health insurance rather than their desire to purchase health insurance (40%) because they couldn't previously afford it.
This has a couple of potential implications. First, it demonstrates that the penalty associated with non-compliance of the individual mandate (i.e., not purchasing health insurance) is doing its job of coercing uninsured individuals and families to sign up. More so, it could mean that as the magnitude of these penalties increases in 2015, 2016 and beyond we could see an even larger surge in Obamacare exchange enrollments, which would be beneficial to the insurance industry and hospital providers.
5. Media still plays a key role in ACA awareness.
Finally, J.D. Power's Marketplace Shopper Study also notes that consumers first heard about the marketplace through the news media (55%) significantly more often than through a state or federal agency (4%).
The takeaway here is that insurers, states, and the federal government need to work together to reach consumers on a broader scale. WellPoint (NYSE:ANTM), for instance, teamed up with Walgreen last year to not only offer brochures in Walgreen stores that would describe was the ACA was and how it could affect consumers, but also to develop a website, LearnAboutReform.com, which served as a one-stop shop to answer consumers' Obamacare questions. Going forward insurers are going to need to work with regulators to develop a plan to reach out to more consumers and allow ACA information, and not the media, to be their primary source of news.