This year, COVID-19 changed fortunes and caused rapid disruption for health plans and the entire healthcare ecosystem. While fortunes turned bleak for some, health insurers reported record Q2 earnings due to lower than anticipated use of health insurance. These financial windfalls resulted in the kind of public scrutiny on health insurers that’s typically aimed at hospitals and pharmaceutical companies, leading to political scrutiny and a Congressional inquiry on insurer profits.
In an already multifaceted, complex system, COVID-19 created new demands for health plans—such as immediate access to telehealth, waived costs and added support for providers and communities. Health plans have proven that they can immediately adapt and innovate to address these challenges. Many have already issued premium relief to members across lines of business as well—advancing MLR rebates to customers at a time when they need it most. However, all of these may be viewed as just “drops in the bucket” by many.
And while private health plans exhaled in early March as Bernie Sanders dropped out of the presidential race, the U.S. healthcare system’s response to the pandemic has revived interest in a more centralized, single payer healthcare system. Health insurers’ profits likely will remain high through Q3 given the summer’s second peak of infections. And as long as health plans are reaping those benefits during COVID-19, they’ll continue to be under the microscope.
The picture is not entirely rosy for health plans in two ways:
- Shifting coverage mix: As we continue into a recession with severe economic upheaval, health plans may begin to see more churn in certain business segments. While many health plans’ employer group membership remained relatively stable through Q2, recent research suggests this may change as small business loans expire. Continued layoffs and affordability may threaten retention and membership size in the employer segment, resulting in 10 million plus people shifting off of employer-sponsored plans. This is a key driver toward the shift we are beginning to see from employer coverage to other lines such as Medicaid and ACA, as we projected.
- Added volatility: As many people have delayed or avoided care, there’s a risk of missing early diagnoses. Further, if health insurance usage catches back up, claims ratios may increase. The actual risks underlying in membership, and pricing them accordingly, may be greater and more volatile.
For years, health plans have invested in lowering the cost of care and focused on “whole-person” care. COVID-19 hasn’t suddenly made these concepts new. Certain demands of the marketplace—cost, experience and quality—haven’t changed at all, and health plans have and will continue to improve upon these.
If anything, COVID-19 may hasten the core mission statement for health plans to deliver better care at a lower price. Here’s how health plan leaders can change the narrative today to show that they’re very much a part of the solution:
- Sustain a nimble and adaptive culture: Health plans are notorious for long, arduous processes that discourage rapid innovation, yet COVID-19 showed they’re capable of moving fast and driving change. There are still many unknowns that will impact health plan fortunes in the near and long term. Whether it’s the outcome of the November elections, the level of COVID-19 resurgence or the Supreme Court ruling on the challenges to the Affordable Care Act, health plans must continue to evolve to not only meet market demands but proactively inform them, as well. Take product development, for example. New entrants and tie-ups in the virtual world are evolving customer expectations. Those living and working online are seeing just how archaic many of their health plans are, and they won’t wait for change. Virtual-first and home based health benefits are excellent examples of health plans developing products that match the needs of a growing cohort of customers. Another example lies in customer acquisition and retention. Health plan sales and marketing functions will need to adapt to a new era of “fungibility,” both in terms of broker/employer engagement models and agile targeting strategies.
- Focus on customer experience and internal integration: Integration isn’t a new concept, but we’re not talking about simple APIs and HL7 integration, we’re talking about shared values that break down organizational silos, while prioritizing the greater good. Instead of creating or hiring a chief telehealth officer, why not think about a chief consumer experience officer or collaborating with the chief medical officer? After all, telehealth isn’t for everyone or every condition and intervention, but focusing on experience has been a telltale sign of success, not just for patients but providers, too. Democratize your insights across health plan departments. Having a more robust and ongoing pulse of the customer can help you make changes that are informed by real-time insights.
- Change your mindset with external partners: All providers are not created equal. Figure out where they need to support you, not just financially. Seize this opportunity to optimize your investment using data and intelligence. A well-intentioned life raft for providers could end up weighing practices down with confusion regarding multiple quality programs. What if several health plans created a “common core” for value-based care—drawing on the most commonly used quality metrics across populations—rather than launching individualized programs? Then, the focus of investment can be on upskilling staff, upgrading technology or both. In addition to providers, the leading health plans should continue to focus in the community on initiatives around prevention through a payer-agnostic approach to drive health equity.
COVID-19 did not break our healthcare system, but rather showed how many repairs are needed to restore faith across constituencies. While health plans are in the spotlight, they should use this opportunity to reinforce their value in solving this broader equation. Near-term windfalls like this will be short-lived and a once-in-a-career moment for most health plan executives. Now’s the time to reinvest and double down on the things that will propel health plans into the future.