If it’s April in the U.S., it’s tax season. What’s new this year is that American taxpayers must report their health insurance status when filing their 2014 tax information with the IRS. And one in two taxpayers doesn’t realize that’s the case. This is the first year that, under the Affordable Care Act (ACA), Americans must prove they are enrolled in qualifying health insurance plans.
Many Americans still have ACA knowledge gaps
One in three people were unaware that people who don’t have health insurance will pay a penalty on their taxes in 2015, according to Intuit’s survey conducted by the Harris Poll in November 2014 which gauged peoples’ views on the ACA and taxes. Furthermore, nearly one-half of Americans did not know that discounts called “premium tax credits” were available to make purchasing health insurance less expensive. In addition, 52% of people also didn’t know that uninsured people meeting certain criteria could qualify for exemptions from the ACA tax penalty.
Peoples’ lack of understanding the ACA also impacts their ability to shop for health insurance – a necessity for getting covered.
There are many types of health insurance shoppers…including non-shoppers
There are six types of consumers when it comes to health insurance plan shopping, according to McKinsey & Company’s survey into peoples’ behaviors during the 2015 open enrollment period.. These people are:
- The Drop-Outs, those who enrolled in an ACA plan in 2014 and quit in 2015. These people felt they couldn’t afford insurance, didn’t think the price was worth the value, or had a change in life status (such as a spouse getting employer coverage).
- The Persistently Uninsured, who did not buy health insurance in either 2014 or 2015. This group of people were unaware of the ACA penalty or availability of subsidies, preferred non-insured care, or don’t believe in the ACA.
- The Newly Insured, who enrolled in an ACA health plan in 2015 on or off the marketplace. This segment of people became aware of the penalty and subsidies, perceived a need for health care, and believed in the value of health insurance.
- The Renewers, who enrolled in an ACA plan in 2014 and kept the same plan in 2015. These people were satisfied with their health plans, wanted to avoid a penalty, or could not find a better deal than their 2014 plan offered.
- The Switchers, who were enrolled both years but changed to a different plan in 2015. Switchers changed plans due to dissatisfaction with their 2014 chosen plan, looked to save money, gained access to a different network of providers, or had their 2014 plan cancelled.
- The Non-ACA insured, who enrolled in a non-ACA plan, these insured people felt their non-ACA was a “better deal,” didn’t believe in the ACA, or distrusted sharing personal data in the context of the Affordable Care Act.
Each of these consumer segments has unique demographics. The persistently uninsured tend to be male, with low value of having health insurance, and most perceiving personal low health risks. 9 in 10 of the persistently uninsured were also unaware of the subsidy amount for which they might have qualified based on their tax status, and 4 in 10 were unaware of the penalty involved in not having health insurance.
The newly-insured tend to be female, with lower health risks, and seeking more preventive care. This group depended most on friends and/or family to help them decide to purchase health insurance. The vast majority were also aware of the penalty for not having health insurance, and two-thirds unaware of the subsidy for which they would qualify based on their tax situation.
For switchers, cost was the #1 issue for changing health plans. Switchers have no gender-differences, with men and women equally represented in this health insurance consumer segment. But having health insurance is valuable to these people, who even when their plans were cancelled from 2014, tended to purchase insurance in 2015.
The non-ACA insured perceived lower health risks, tended to be older (50-64 years of age), and valued health insurance – but not generally approving of the ACA in general or the costs involved with buying an ACA-plan.
McKinsey developed these consumer segments based on a survey of some 3,000 qualified health plan eligible uninsured and individually insured consumers to learn about how these people shopped for and assessed health plans during the 2015 open enrollment period.
Health plans benefit from getting more consumer-friendly…
The McKinsey health plan shopping segments of Renewers, Switchers, and Newly Insured people resonate with findings in J.D. Power’s ninth annual survey of health insurance plan member satisfaction. J.D. Power found that consumers’ satisfaction with health plans increased in 2014, with insurance companies getting more real and responsive about customer service, coverage, provider choice, communication, claims processing and – of high concern to most people – costs.
Published March 9 2015 (and fielded in November and December 2014), J.D. Power noted a big improvement in health insureds’ consumer satisfaction, especially with respect to plans’ communication with members as companies have begun to meet people where they “are” – via mobile phones and text messaging. In fact, member satisfaction was found much higher among consumers who contacted their plan via mobile app at least once in the past 12 months compared to people who did not. And health plan members who looked at their health insurance companies as trusted advisors were less likely to switch out of those health plan providers.
Furthermore, consumer satisfaction with plans also increased over 2014 to 2015 in relation to costs, where more satisfied plan members saw declines in overall out-of-pocket spending for premiums, co-payments, and deductibles.
A list of J.D. Power’s top health plans for member satisfaction by U.S. region and state appears in this press release.
Health providers’ financial wellness improves, too, with consumer-focused approaches
As J.D. Power’s and McKinsey’s studies both point out, cost and perceived value are major drivers of satisfaction for consumers when it comes to their health plans. Peoples’ understanding of how to use these plans, in terms of managing and paying down deductibles, impacts both consumers’ pocketbooks and also health care providers’ bottom-lines. In this growing era of high-deductible health plans, doctors’ practices and hospitals alike are experiencing financial challenges as consumers get used to new payment models. Providers have operations geared to collecting payments from third parties. Increasingly, clinicians and hospitals look to patients themselves for paying bills with first-dollar coverage out-of-pocket.
85% of providers agree that patient financial responsibilities are growing, Availity’s survey of practice- and facility-based health care providers, published in February 2015, observed. Most providers also note that self-pay is on the rise, and 60% of providers see more patients with individual plans, Availity said. For 9 in 10 practices and institutions, high-deductible plans are becoming the new normal in provider business offices.
“Today, every employee in the practice is member of the business office,” recommends a report from Navicure appropriately titled, “Patient Collections: Business Critical for Today’s Medical Practices.” The health care provider is now in the retail health business, relating directly to this new payer: the consumer. So the “Collector’s Checklist” for health providers now includes items that J.D. Power’s survey would consider for customer satisfaction, such as “warmly greet each patient,” using the patient’s name to show respect, and thanking the patient for paying.
Transparency is a critical M.O. in this new retail health environment, as health care providers must deal with the question “when the patient asks ‘how much?’” Navicure recognizes that it’s not unusual for patients to contact several practices to price-compare for services and other details, such as clinicians’ qualifications and malpractice experience. Consumers-as-payers expect to receive clear responses to such questions as people grow their health care shopping muscles and learn to effectively manage health care finances.
Artful communication can smooth the journey for health consumers…
The McKinsey study points out the reality that one-size-doesn’t-fit-all when it comes to health insurance. This is true for health plans and providers in terms of their cost and value in the eyes of health consumers.
J.D. Power found that effective communications, even above cost, bolstered consumer satisfaction. Communication bolsters trust and authenticity, which are key components of health engagement we learned in the first Edelman Health Engagement Barometer.
“The one-size-fits-all communication strategy doesn’t work,”Ciro Giue of Hub International, an employer benefits consultancy, told the Workplace Benefits Renaissance meeting in February 2015. This is based on demographic and generational differences, but also speaks to peoples’ use of technology for managing daily living. The mobile phone and tablet are communications platforms of choice for some people, which the J.D. Power study found was a key positive for health plans who engaged in communicating via texts and mobile. For older people, Giue pointed out in his talk, increasing the size of the font in print publications and online websites can improve communication and consumer comfort among some older people when reviewing information. “We need to say more with less,” he added, recognizing the power of infographics in benefit communication.
Ultimately, building a smarter, health- and financially-savvier health care consumer (and taxpayer) will benefit health plans, providers, and most especially, patients.