For an industry that has undergone immense change in recent years, 2019 looks to be more of the same for health insurance. Some of the pressures come from standard sources such as governments, employers and providers, while others are driven by broader demographic or technological trends. Whatever the root cause might be, health insurers will continue to value adaptability, cost containment and continuous operational improvements to meet the challenges 2019 will bring.
Here’s 10 trends health insurers are watching this year:
- Growth of High-Performance Provider Networks. Often known as Accountable Care Networks or Centers of Excellence, many employers are looking to insurers to offer plans that trade a much tighter and more closely coordinated provider network for reduced premium costs. Insurers, employers and providers are all betting on closer coordination of benefits, richer data sharing, improved outcome measurement and other forms of tighter integration to deliver both quality and cost improvements for all concerned. These models offer real opportunity for insurers, but come with significant demands on IT infrastructure and require robust data analytics capabilities.
- Companies Freezing Benefits. Faced with potentially crippling cost increases, employers are increasingly shifting costs to their employees. The average cost of employer-sponsored health care benefits is expected to approach $15,000 per employee in 2019, with large employers expecting to pick up approximately 70 percent of that cost. This will leave an average of $4,400 per large-company employee in out-of-pocket expenses and premium contributions, while small and medium businesses face even greater cost pressures.
- Growth of Deductibles. As Americans become more familiar with the current insurance marketplace, rising deductibles have become a common pain point for policyholders. This means both a growth in opportunity for Health Savings Account (HSA) management, as well as a consumer satisfaction challenge.
- Rising Costs. While formerly double-digit annual cost increases have fallen to around 6 percent over the past few years, that’s still higher than inflation and unsustainable in the long run. While there are a number of drivers for this cost growth, one major cause is widely agreed to be provider consolidation, which changes the negotiation landscape for insurers. Relatedly, physicians are increasingly practicing as employees of a larger health system or provider group instead of in private practice, leading to increased prices as well. With the cost of providing care increasing, and margins locked in by regulators, insurers are dependent on reducing the costs they can control.
- Rise of Health Advocacy. With benefit costs rising and employees bearing more of them, many employers are investing in health advocacy to help employees make efficient, effective and medically sound utilization decisions. This creates challenges and benefits for insurers, including data privacy issues and new communication challenges that can stress legacy applications past their designed capabilities.
- Evolution of the Affordable Care Act. The individual mandate penalty is no more, which will have an unknown impact on the market for individual insurance. Additionally, state-level Medicaid expansion under the ACA is still a hot political topic, with some states planning expansion while others consider freezes or rollbacks. Insurers may find themselves competing with public options in some areas, while in others they may have new cohorts of former Medicaid customers on the market for individual insurance plans.
- Americans are getting older, as the Baby Boomers reach retirement – and Medicare – age. The giant demographic cohort that has been the bread and butter for health insurers for most of the past four decades is largely aging out of employer-sponsored and private individual health insurance plans. The average customer in 2019 is less likely to look like the salary earner of the Baby Boom. The customer to whom insurers are marketing is becoming more likely to be from a diverse ethnic background, more likely to be foreign-born, more likely to be a woman head of household and more likely to be self-employed or part of the “gig economy.” This places new requirements on insurer marketing capabilities and channels, as well as on customer relationship management.
- Personalized Medicine. Insurers continue to struggle with the challenges of developing coverages for genetic testing, precision medicine tests and therapeutics and other “personalized medicine” advances. These new technologies offer potentially giant advances in treatment outcomes, but at high costs with challenging implications for risk management. As insurers follow the evolution of these technologies, one thing becoming clear in 2019 is that a world of personalized medicine requires insurers to be able to engage meaningfully with patients at the individual level, backing decisions with sound data and analysis to ensure the best outcome for all stakeholders.
- State Regulatory Uncertainty. In addition to the changing federal regulatory environment, one big factor in 2019 for health insurers who are regulated on a state-by-state basis is the changes the 2018 election brought to state governments across the country. Five fewer states now have split governments in which one party controls the legislature while the other has the governor’s mansion, leaving 36 states with single-party control that is more conducive to passing health insurance “reform” legislation of one form or another. These reforms can impose significant operational changes with little warning, requiring insurers to be prepared for often conflicting requirements on a state-by-state basis, with potentially significant penalties for failures in compliance.
- Health Care Goes Mobile. The mobile digital revolution that has revolutionized everything from how we communicate with our families to how we hail a cab is creating huge new opportunities and challenges for health insurers. Wearable and smart devices and the increasing affordability of telemedicine platforms are empowering new forms of health care and patient interaction in out-of-hospital settings. As interactions such as remote patient management become more common and consumers become more engaged in collecting and managing their personal health information, insurers and providers will need to work together to design and manage systems that encompass new paradigms for out-of-office health care.
Looking forward to 2019 and wondering what you could do to take advantage of health insurance trends before they take advantage of you? Contact us to find out more.