70 percent of health plans are not ready for open enrollment
As health plans take the field to compete for 10 million online shoppers, 70 percent of them are not ready. As ill-prepared as a baseball team without an infield, 70 percent of health plans have holes in the member purchase experience.
Most Health Plans Will Lose Market Share
Most health plans have left an open gap for their competitors to steal their members. The stakes are high. In 2014, 50 percent of consumers who returned to HealthCare.gov changed health insurance providers. When consumers try to buy a plan, 80 percent abandon their purchase while they shop. To win new members, health plans must become more member-centric.
Source: Member preferences from Javelin Strategy & Research. Insurers’ payment choices from ACI Worldwide & Ovum Global Payments Insight survey of insurers with additional review of 10 leading health plans conducted on October 28, 2015
Most Health Plans Not Meeting Member Expectations
70 percent of health insurance companies will miss out on new sales by not providing members all the options they want to pay for their plan (see the red bar on the graph above). Electronic checks/ACH rank highest in member preference with 37 percent of members, yet 26 percent of insurance companies do not offer this option for members to buy insurance.
Health plans give their competitors an opportunity to meet member preferences with every payment choice they do not offer. Though smaller than ACH, at 11 percent, mobile payments still represent a significant opportunity for health plans to sign-up new members. Most insurers miss this opportunity.
It happened more than 20 years ago, but I still remember when Pizza Hut missed an opportunity by not accepting credit cards. The smile from the piping hot pizza became a big frown when we learned we had to drive home and back to pay with a check. Most health plans put online shoppers in a similar situation by limiting how shoppers can buy insurance. For example, the 40 percent of insurers not accepting cash limit their ability to win lower-income shoppers.
Security Fears & Complex Ecosystem Stifled Progress
To meet member expectations, 84 percent of insurers prioritized a comprehensive digital strategy, but security and complexity prevented progress. Fears of exposing customer information prevented investment in insurance payment systems. The complexity of many different ways consumers can purchase also inhibited health plans. Though progress has been slower than desired, health plans look forward with optimism.
Consumers purchase health insurance through different channels
Source: Forrester Research, Inc. “2014 Website Functionality Benchmark: US Health Insurance Plan Public Sites”, Peter Mueller, March 9, 2015.
Health Plans Increasing Investment to Win & Retain Members
“Leading health plans have been vocal about finally making serious investments in retail-oriented, digital shop-to-enroll experiences,” writes industry expert Peter Mueller. They recognize the moment of truth is when shoppers become members by making a payment. To win and retain members, health insurers plan significant changes:
• 50% of insurers are evaluating 8 new payment options
• 49% of insurers are increasing investment in insurance payment systems
• 41% are holding investment constant
New investments in tokenization, interactive eBilling and recurring card payments will spark market share growth for health plans.
53% of Insurers Want to Mimic Apple Pay
To address security fears, most insurers plan to use tokenization technology like that in Apple Pay. Apple Pay created excitement across the country by offering a simpler and more secure shopping experience; and the key to Apple Pay’s enhanced security lies in that it does not transmit payment card numbers to the merchant—it uses a token instead.
Health Plan Boosts Member Engagement with Interactive Documents
A large health plan in the Midwest turned its most frequent member touchpoint into an opportunity to deepen relationships. This insurer saw the tremendous untapped opportunity in the eBills and explanation of benefits they send members. Today, 16 percent of insurers report that eBilling has boosted member engagement. This will improve. And soon, the industry norm will be to incorporate the most promising member engagement technologies listed below into the most frequent member touch points – eBills and explanations of benefits.
Source: ACI and GatePoint Research survey of insurance companies
One Health Plan Seized the Opportunity to Retain Members
Health plans across the country are enhancing their member experience. To bolster retention, a large health plan in the northeast recognized members wanted to not only start their membership by paying with a credit or debit card, but also renew their health plan with automatic card payments. With market share ramifications, more health plans will focus on retaining members with initiatives like this.
Just as major league teams add talent during the season, it’s not too late for health plans to fill their gaps and finish this year’s open enrollment season by winning and retaining more members.
[ 2 ] Armour, Stephanie. “Premiums for Health Insurance Bought on Exchanges to Climb in 2016.” Wall Street Journal October 26, 2015.
[ 3 ] Insurance Business America
Related Blog Posts
Payments and Fraud: The Paradox Twins
Digital commerce through web and mobile is where merchants predominantly experience shopper growth today. This has become a hugely important domain for their focus. It offers a means for international growth, new market penetration and a way to engage with shopper-hungry Millennials in their culture. Merchants frequently adopt a Digital-First, eCommerce-First or Mobile-First strategy to ensure full corporate buy-in to this strategy.
Open Payments Systems for Merchants: Don't Close Down Your Options
Remember “Open Systems”?
It was a big industry nom du jour in the 80s and 90s. Every IT system had to be open and therefore flexible and future-proof. Nobody can argue with the logic behind this; making systems easy to integrate with other systems, ensuring vendors could cooperate with one another; creating agility to improve time to market and drive down costs.
Why It’s Time for Women to Rise UP
As a senior software engineer at ACI Worldwide, Rawan Shawar helps to guide her team’s priorities and enhance processes at both the team and organizational level. Recently, Rawan was selected by the organizers of Money20/20 Asia to be part the Rise Up Class of 2019.
Can Digital Payments Be Kind?
There is no doubt that the era of less (or minimal) cash is truly upon us. According to the Access to Cash Review, cash could fall to just 10 percent of all payments in the UK within the next 15 years.
Other countries, such as Sweden, have already seen significant changes – cashless payments have grown so quickly that only 10 percent of the 20 SEB banks in Stockholm now hold cash. Beyond Europe, China is leading the way with USD$12.8 trillion in mobile payment transactions in 2018.
Keeping Up With Fraudsters: A Month Isn’t Enough
As the Government of Canada campaigns for improved fraud prevention and awareness this month, I’d like to do my part as a fellow Canadian, and shed some light on why payments need to stay a step (or more) ahead of fraudsters, today more than ever.
Local Perspectives: Real-Time Realities Across Asia-Pacific in 2019
Money20/20 Asia returns to Singapore this week, attracting payments professionals from around the vast APAC region – and beyond. The real-time and open imperative is one of the reasons why all eyes are on Asia-Pacific when it comes to payments, so I caught up with ACI payments experts representing three of the key countries within the region, to take the pulse of real-time schemes that are in varying stages of maturity.
What it Takes to be an ‘Influential Woman in Payments’ [Q&A]
Coming off the back of International Women’s Day this past weekend, PaymentsSource has recognized the Most Influential Women in Payments, spanning multiple industries including financial services, retail, investment and technology. Among the honorees is ACI’s very own Carolyn Homberger, group president, global sales. Part of the executive leadership team at ACI, Carolyn leads a team of payments professionals operating across all global regions, and plays a critical role in setting business strategy. As an advocate for the leadership and growth of women in the payments industry, Carolyn is also responsible for launching ACI’s own Women’s Initiative.
What We Talk About When We Talk About Digital Transformation
The recent headline grabbing announcement that Banco Santander has signed a USD $700M contract with IBM got me thinking… what’s up with ‘Digital Transformation’ these days? Santander’s announcement was all about digital transformation… and they are a forward-thinking bank. The new global technology agreement is designed to increase efficiencies in the bank’s operations, enable it to be more innovative and deliver new products, faster. But not every bank can pony up $700M and not every bank has suitable technology in place. It got me thinking, what is actually needed for digital transformation?
Putting Malaysia on the Path to Payments Innovation
The public launch of the DuitNow instant credit transfer service, in December 2018, provides just a taste of what lies ahead as Malaysia’s Real-time Retail Payments Platform (RPP) is progressively rolled out. Fueled by Bank Negara’s (BNM) increasing support for e-payment platform development, there has been a steady increase in mobile wallet and digital payment usage, setting the stage for 2019 to be a year of transformation for the payments industry in Malaysia.
What Can the Re-Regulation of Other Industries Tell Us About Open Banking One Year On?
UK Open Banking just reached its first birthday milestone (on January 13 to be precise) and given my own commentary – including in the ACI blog – on this topic, the first anniversary of Open Banking in the UK certainly won’t pass without a debrief on the progress that’s been made and what challenges lie ahead.