Source: White House on Flickr.
In just three weeks open enrollment for the Affordable Care Act, or ACA (but better known as Obamacare), will kick off for its second year.
Of course, things will be a lot different this time around. Insurers and the federal health exchange, Healthcare.gov, have a year of experience under their belts, so the expectation is they'll be better equipped to handle an influx of enrollees. In addition, the enrollment period itself is a lot shorter, lasting just three months this year, compared to six months last year. Also, the penalty for violating the individual mandate and not purchasing health insurance has gone up, with an individual responsible for paying the greater of $325 or 2% of your annual income. The $325 minimum penalty is a full 242% higher than in 2014, and will act as an extra incentive to get procrastinators enrolled.
But, in some ways a lot of things have stayed the same. The approach to purchasing health insurance will remain the same, with individuals being able to compare plans side by side in a transparent manner. The number of health plan participants is also expected to rise in a number of states, with companies like UnitedHealth Group (UNH +2.77%), which sat out much of 2014 in many states, announcing its entry into a number of markets. In other words, consumers may find even more plans to choose from in 2015 compared to last year.
Source: Flickr user Helga Weber.
Understanding what consumers want is tough
The big challenge for insurers has been understanding what consumers want and how best to entice the remaining uninsured to enroll, as well as keep those people who are currently enrolled in place. The reason this is a challenge is because consumers have voiced a number of differing wants and needs, such as low plan pricing, a large physician network, a bounty of plan choices, and short wait times at doctor's offices, to name a few desires. Combining all of these aspects into a single plan for consumers has been difficult to say the least.
But, are one or two aspects of Obamacare enrollment more important than the others? I'd certainly contend so following a recent study from Radius Global Market Research, or Radius GMR as it's better known, which was released nearly two weeks ago.
According to Radius GMR, the vast majority of households covered by the ACA are satisfied with their current coverage, with the majority of respondents believing they are receiving equal or better care compared to before Obamacare was implemented. As the study further noted, only 20% of respondents indicated they weren't satisfied.
Source: Flickr user Reynermedia.
Here's what matters most
Yet, two-thirds of respondents voiced to Radius GMR their intention to change plans in 2015. Why would they change plans if they're satisfied? Because consumers felt that they could get a better deal by shopping around. Radius GMR specifically listed lower-plan costs and improved access to doctors as the two compelling factors that would cause consumers to shop around.
Deeper probing into its respondents' answers revealed that more than half expect their premiums to rise within the next six months. Also, more than a third of respondents told Radius GMR they had to switch doctors once on an ACA plan because their previous primary doctor wasn't on their new plan.
I'd certainly say there's merit to Radius GMR's findings as I'd count myself among the two-thirds of plan participants that'll likely be shopping around for a good deal. You see, I'm part of the highly coveted and profitable healthy young adult crowd that's expected to have a low medical utilization rate (i.e., I don't head to the doctor much) and make Obamacare successful by spreading healthcare costs around over a greater number of people. However, my lack of immediate medical service needs makes me want to seek out one of, if not the cheapest plan available in my state – and I doubt I'm alone.
But, here's the catch: the cheapest plan in your state from 2014 is probably not going to be the cheapest plan in 2015. Although we're still awaiting insurance pricing data from quite a few states, a recent Kaiser Family Foundation study revealed that 12 out of 16 locales (15 states plus Washington, D.C.) had a new lowest-priced plan in 2015 compared to 2014. For highly cost-conscious consumers, or those like myself who utilize their doctor very rarely, switching to a cost-effective plan is imperative.
Similarly, for those individuals who do visit their doctor somewhat regularly, but had to switch physicians due to enrollment in the ACA, we could see these individuals jump to a different plan in order to get back to their lifelong physician.
Insurers are facing quite the task
In 2015 insurers are going to be fighting a battle on two fronts: signing up the remaining uninsured, which is already a tougher crowd than last year, as well as retaining existing members from jumping ship based on price or physician network size.
Perhaps no group of insurers risks seeing consumers jump ship more than companies like Centene (CNC +1.78%) and Molina Healthcare (MOH 3.08%) which ventured into individual insurance for the first time last year. Though these insurers still rely heavily on government-sponsored plans like Medicaid to bolster their profits, these companies specifically angled their individual plans toward lower-income and cost-conscious consumers. Because Centene and Molina had no prior experience in pricing individual plans last year and are likely to see sizable premium price swings this year, there's the likelihood that if they were the lowest-priced plan within a state they may not be so anymore as extra competition enters the field. With Centene enrolling more than four times as many members via online health exchanges than Molina it would have the greatest churn rate exposure of the two.
Source: Covered California.
WellPoint (WLP +1.38%) investors will also want to keep an eye on 2014's biggest winner when it comes to total enrollments. WellPoint is widely expected to be a big winner with additional enrollments in 2015, but that's only if it can keep its current members from jumping ship to another insurer. I'll certainly be curious to see how well WellPoint does in retaining its existing members.
Finally, I'm curious to see how insurers are going to further educate the public about the Affordable Care Act. Senior vice president of Radius GMR, Kathleen Relias, noted that "[o]verall satisfaction was stronger among those enrollees who reported receiving adequate explanation of ACA coverage," and that "[o]nly 44% of Americans feel they are well informed." We've already seen WellPoint taking the initiative in the culturally diverse state of California and advertising on TV, the web, and in print in multiple languages. The question is will other insurers in different states follow suit with unique ways of reaching currently uninsured consumers?
We have a lot of questions that'll be answered in just a matter of weeks.
