On January 2, 2007 I was foolish enough to post some predictions for the year. At the time I promised to review my results in a year. And here we are, a year later. Just keep in mind these were predictions. I wasn’t saying these things should occur. I was predicting they would occur.
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2007 Prediction #1. More Major Carriers Will Enter the California Individual Health Insurance Marketplace
The theory was sound. The individual health insurance market in California is huge. And with employers dropping coverage it has been getting bigger. Major carriers (I mentioned Humana and Cigna) couldn’t ignore the potential here. And they still can’t, but they certainly didn’t act on it in 2007. My guess is the health care reform debate created enough uncertainty that, combined with opportunities in other state, made California less attractive. In fact, a carrier, Nationwide, left the California individual medical market. So while other carriers might get here eventually, this prediction was a big miss.
2007 Prediction #2. Carriers Will Experiment With New Distribution Strategies
The premise of this conjecture rested on carriers recognizing that online sales weren’t enough in the indivdiual insurance market segment. While that channel would grow in 2007 (see prediction #8) I sensed a countervailing trend to get more people in the streets talking about individual medical coverage. So I predicted a carrier (didn’t know which one) would supplement its independent agent channel and launch a captive field force. Agents wouldn’t like it, but some carrier’s need to increase market share would drive them to at least experiment with this approach. Turns out 2007 was not a year for carriers to be upsetting agents. In fact, all of the carriers have reached out to agents and their association, the California Association of Health Underwriters, for input and help on health care reform issues. Chalk this up as another miss.
2007 Prediction #3. A Carrier Will Try to Introduce Per Member Compensation
Tying agent compensation to the cost of health care doesn’t make much sense, yet the historical practice of paying agents a percentage of the health insurance premium pay has deep roots. Like many traditional practices they’re hard to change. I thought 2007 would be the year one of the major health insurance carriers would take a stab at it. I was wrong. The desire not to upset their relationships during the health care reform process may have influenced this, or it might be that none of the carriers thought this was an important enough issue to address. In any event, this is clearly miss #3.
2007 Prediction #4. Kaiser Will Seek to Work Closer With Agents in the Individual Market
Kaiser has been thinking about ways to work with independent agents since their small group team successfully added this distribution channel. With Tom Carter and Mitch Ross, among others, in leadership roles there, I felt 2007 would be the year they’d actually move forward with an agent channel. I’m sure they’re still considering it, but their deliberations — which can seem endless even to those inside Kaiser — are ongoing. Sensing a trend here? Strike 4.
2007 Prediction #5. No Major State Health Care Reform in 2007
I launched this blog thinking it would deal with health insurance related topics, but in a general way. That it came to focus on health care reform (to the extent that I renamed the site) was a gradual process. In hindsight it’s kind of interesting (at least to me) that it wasn’t until the fifth prediction that the topic of health care reform came up. Here’s the full text of that forecast: “This is a cheap prediction. While health care reform is at the top of everyone’s agenda in Sacramento, the issue is too big and complicated, there are too many stakeholders involved with too many diverse perspectives, and there are too many other pressing issues demanding attention for the Governor and Legislature to work things out in one year. But watch out for 2008.” Less of a “cheap prediction” than I imagined, but it turned out to be right nonetheless.
2007 Prediction #6. Mandates Become Viable
The idea here was that acceptable health care reform would require reducing the number of uninsured. This would mean requiring all residents to obtain coverage and that, in turn, would mean requiring all carriers to sell coverage to all applicants. These twin mandates were are key components to the health care reform package currently awaiting Senate consideration. And they’ve been a big part of the debate for most of the year. Clearly, mandates are viable. Hit #2.
2007 Prediction #7. More Musical Chairs in Carrier Organizations
There was a lot of changes occurring in the leadership of health plans around this time last year. In this prediction I noted, for example, that Lisa Rubino, had recently left as CEO of Blue Shield’s individual, small group and government program division and would no doubt be recruited quickly. Shortly after this post, Ms. Rubino was named president of Molina Health Plans in California. And while fewer moves among the carriers took place than I was thinking when I originally wrote this one, there were a number of changes. Since I’m the one giving out the scores here, I’m going to count it as a hit — but only barely.
2007 Prediction #8. Online Sales Will Continue to Grow
This was the gimme of the lot. The trend of independent agents to move a portion of their sales online is growing. The top producers for virtually every carrier sell exclusively or mostly online. Internet-assisted sales is a permanent part of the individual health insurance landscape. Its influence on small group sales is growing as well. I still believe that local agent who get to know their clients do a better job of finding the right health insurance plans for a particular consumer’s unique needs than any web-based sales site. But I also believe local agents should integrate the Internet into their sales process. Anyway, this was an easy prediction to get right, and I did. So that makes hit #4.
The tally reads four hits and four misses. My prediction skills are either half full or half empty, depending on your personality type. Significantly, I missed on all the predictions dealing with carrier competition, but got both of those involving health care reform right. Narrowing the focus of this blog to health care reform-related issues was a good move.