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Impact of Affordable Care Act on Payers
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Impact of Affordable Care Act on Payers

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The Affordable Care Act changes everything for payers as they will have to move from a B2B strategy to a B2C strategy and they are not ready for it.

The Affordable Care Act changes everything for payers as they will have to move from a B2B strategy to a B2C strategy and they are not ready for it.

Published in Business , Economy & Finance
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  • 1. Payers Must Reinvent themselves because of the Affordable Care Act (ACA) paulroemer@gmail.com A remarkable experience for every person every time (on any device)
  • 2. The importance of innovating and transforming customer experience just skyrocketed. Payer Executive quote: “We do not need to worry about customer service, we just have to pretend that we do to appease regulators. Where else can they go? We have a captive market.” Payers can not longer offer lip-service to customer experience, they will need to offer a remarkable experience. Executive Summary: The impact of the ACA on Payers A remarkable experience for every person every time (on any device)
  • 3. The Payer business model must move from B2B to B2C. • The percentage of revenues from individuals will grow dramatically • The relative cost to serve an individual will be significantly higher • The number of customer touchpoints and interactions will grow dramatically • The existing sales model for individual policies will not work • Customers will churn rapidly to get the best price, coverage and Customer Service The result is that Payers will sell, deliver, and support individual policies that more closely resemble the wireless industry (long-term contracts). Executive Summary: The impact of the ACA on Payers A remarkable experience for every person every time (on any device)
  • 4. The Payer business model and customer experience strategy is not prepared to move from B2B to B2C. • The number of individuals choosing where to buy insurance will increase dramatically. That is the good news; that is also the bad news • Given the chance a majority of the self-insured would change companies – Payers are not noted for: • Taking care of customers • Attracting customers • Retaining customers • The ACA gives individuals that chance: – Decline of Employer Sponsored Insurance (ESI) – Elimination of pre-existing conditions exclusion – Uninsured becoming insured – Rate competition Executive Summary: The impact of the ACA on Payers A remarkable experience for every person every time (on any device)
  • 5. Payers’ systems and processes are not designed to effectively support significantly more individual customers in: • eCare • eCommerce • Mobile channels • Customer portals • Call centers • CRM • Business development • Sale & Marketing • Payment & Collections • Claims Executive Summary: The impact of the ACA on Payers A remarkable experience for every person every time (on any device)
  • 6. The bad news for payers is: • Cannot exclude patients with pre-existing conditions • Children may remain on parent’s policy until age 26 • Medical loss ratio; 80% of payment must go to paying of coverage • Payers competed for ESIs, not much for individuals because: – They accounted for much less revenue – They had a higher cost to acquire and serve • Individual churn wasn’t an issue—there was no where else to go • The Payer business model was designed to support ‘captive’ customers • Payer customer experience and CRM designed to support ESIs, not individuals • Insurance exchanges create additional competition • New subsidies for low income individuals The impact of the ACA on Payers A remarkable experience for every person every time (on any device)
  • 7. The good news for payers is: • Young and healthy uninsured will now buy coverage • As costs increase employers will drop health benefits thereby creating more individual policy holders • Individuals have a choice • Rapid expansion of individual insurance market The impact of the ACA on Payers A remarkable experience for every person every time (on any device)
  • 8. Employer-Sponsored Insurance (ESI) will decline: • McKinsey: 30% of employers will definitely or probably stop offering ESI • The Payer business model is designed to support an 80:20 model: – Twenty percent of the customers yield eighty percent of the revenues – ESIs have a lower cost to serve – ESIs require a different business development and sales and marketing model The impact of the ACA on Payers A remarkable experience for every person every time (on any device)
  • 9. The new customer mix, the 80:20 Rule is ending The impact of the ACA on Payers A remarkable experience for every person every time (on any device) Individual customers ESI customers Individual customers ESI customers
  • 10. Payers must define the strategies, processes, and systems needed to support their new customer mix. • What will a dramatic increase in the number of individual customers affect? • Assess which strategies, processes and systems will be impacted • How will this impact a Payer’s digital strategy? • How will this impact a Payer’s mobile strategy? • How will this impact a Payer’s call centers and CRM? What Should Payers be doing now to be ready? A remarkable experience for every person every time (on any device)