Here in the Northeast, the seasons are changing. Between the foliage, the switch to standard time and the closing of the baseball season (sorry, Mets fans!), fall is officially upon us.
This week also kicks off another season: open enrollment on the federal and insurance exchanges created by Affordable Care Act (ACA). Those entities seek to sign up a portion of the approximately 30 million uninsured Americans eligible for coverage and to retain those who already have it.
Newly launched campaigns seek to create awareness and drive action. For example, I noted multiple insurance carrier commercials this Sunday—hoping to build awareness that translates into brand preference for those on the exchanges. Also, @healthcare.gov increased its social-media presence through a hashtag campaign: #getcovered (and #staycovered).
However, recent announcements from the Obama administration suggest that getting individuals signed up or keeping them covered is proving more challenging than originally expected.
Consider the projections for the number of enrolled lives on public exchanges by the end of 2016:
- 20 million+: published by the Congressional Budget Office and Accenture as recently as this March
- 10 million: published by the Department of Health and Human Services in mid-October
Many were shocked at the magnitude of this reduction. Putting this goal into further context, it represents fewer than a 1 million-person increase from the expected lives covered by the end of this year (9.1 million).
I was not surprised by this reduction at all, because we have observed similar challenges when supporting companies launch new products or services in insurance and other industries.
“They say they haven’t yet found a message that can persuade many cash-strapped people to buy insurance if they have resisted doing so until now.” *
This recent quote from a federal official nicely summarizes the issue. Expanding on this, I believe three primary factors are contributing to slower-than-expected adoption:
- Rising plan costs: Average 2016 premiums in “silver” plans (the second-lowest priced offer) are expected to increase 7.5% in the approximately three-dozen states supported by the federal exchange. Individuals already covered are experiencing sticker shock, leading to plan cancellations. Mergers and consolidation in the healthcare landscape could also increase consumer costs by reducing choice.
- More ways to opt out: Many think the penalty the uninsured will face in 2016 (starting at $695 per individual) is too small to incite behavior change, which is only exacerbated by higher premiums. What’s more, millions of uninsured can avoid the penalty through an approved exemption. The list of exemptions has increased to greater than 30 since the law’s passing.
- Continued skepticism: Will ACA stay or be repealed? I honestly can’t keep up myself! There is yet another bill in the Senate seeking to repeal key parts of the ACA (including the individual mandate). Moreover, Republican presidential candidates are taking a stronger stance by vowing to repeal it altogether if elected. Even if this does not impact 2016, the continued back and forth creates uncertainty for everyone involved.
What can distribution organizations learn from this?
How can these takeaways apply to distribution organizations looking to launch their own exchange or product offering? Consider three tips:
- Emphasize benefits rather than costs: Plans on the exchange, especially for subsidy-eligible individuals, appear to be well priced, but they are still far more expensive than paying $0 (or a $695 penalty). The right frame of reference is the value insurance provides relative to the costs associated with a catastrophic event. We’ve observed that marketing new launches with benefit-oriented messaging resonates more strongly with customers (or salespeople).
- Go local: With ACA, some local organizations are forming and meeting face to face with those who need assistance. This speaks to the benefit of a grassroots approach in driving change, especially given the levels of confusion that exist during launch. Enlisting local champions to speak on behalf of the initiative can create excitement in ways that a national (or organization-wide) campaign cannot. For example, an insurance company that launched a new enrollment platform to its agents observed dramatically higher adoption rates in markets with strong local advocacy versus those without the same level of support.
- More overt incentives: Incentives are nice complements to the buzz of a product launch. In the case of the ACA, the incentives (subsidies) may not be well understood by the general public and the disincentives (penalties) may not be harsh enough. We’ve been successful with launch programs that directly target customers (or agents) at every step of the process to build understanding and keep engagement high. The same insurance company mentioned above observed higher adoption rates among those targeted with an individual outreach and even higher rates when that outreach was paired with an incentive.
While the ACA story will continue to unfold, I’m confident that we already can apply the lessons from the rollout thus far to product launches within and beyond insurance.
*Radnofsky, Louise. “Health-Law Volunteers Face Struggle for Sign-Ups in Latest Enrollment Push.” The Wall Street Journal, 27 Oct. 2015. Web. 2 Nov. 2015.