Making it Simpler: Reinventing Individual Health Insurance

KISS, as a business imperative, is cited so often it’s passed beyond cliché to become background noise. Keep It Simple Stupid, however, is more of an illusive ideal than a comfortable accomplishment for most businesses. The individual health insurance industry is no exception – yet it needs to be.

 

Consumers buying medical coverage for themselves and their families lack the support network larger enterprises have. They (hopefully) are working with an independent insurance agent who understands their needs and knows the way through the maze of getting coverage, fixing billing problems or getting claims paid. But there’s no human resources department in the living room or colleagues to call upon for help in the kitchen. Worse, for those without an agent, there’s often no one to call for help than the carrier itself.

 

This isn’t necessarily a bad thing. Many people working in carriers’ membership service departments are quite good – once you get past the dreaded phone system. (I just dealt with a customer service rep at the health plan for my small business who solved the problem in one phone call – and was nice about it to boot).

 

The thing is, however, if you need to call for help, then something isn’t working right. Getting health insurance shouldn’t be complicated. Neither should understanding bills or explanations of benefits (EOBs). And doctors and hospitals shouldn’t have to devote so much resources and time into their interactions with health plans.

 

If Google can make searching the web clean and simple, if Apple can make a cell phone/music player/ PDA elegant and straightforward, if Visa and Mastercard can present payment histories in a relatively easy to understand manner, if Southwest can make booking a flight a breeze, then certainly health plans could simplify their processes.

 

A place to start would be with the products themselves. Each carrier describes their benefits in their own terms. Surely there’s a best practice for this kind of thing, but every carrier has its own unique and often idiosyncratic method. The result: agents (and their clients) devote hours to creating their own apples-to-apples comparisons.

 

There are the conspiracy theorists out there who believe this is done to make it more difficult for consumers to understand what they’re buying. I believe their wrong: why assume bad intent when indifference or incompetence explains the situation? When it comes to presenting benefits I think it’s more a case of an inward orientation with a dash of pride of authorship thrown in.

 

Or take provider directories. Many have moved online, but again, there’s a best practice out there that would make finding your doctor even easier. Or claim forms. Every doctor I see (and at my age it’s more than one, now) complains about the paper work. There have been efforts to move claim submittals online, but the problems with the process are more than technical. There’s also a need to simply make the process simpler. There’s a place for uniqueness. Commodity material is rarely that place.

 

Instead, the focus needs to be on something somewhat foreign to most health plans: design. Design has become a hot business concept. Magazines like Fast Company, Inc., Fortune fawn over the concept and those who excel at it. Products like iPods and half the house wares at Target are held up as icons of a new business paradigm.

 

Yet design shouldn’t be the sole purview of gadget manufacturers or fashion designers. Processes can be well designed, too; so can forms. But good design will only come to the work flows and materials of health plans if it’s a priority of their leadership. And that takes some courage. It’s not easy to make being easy a corporate priority, especially when your industry is under fire.

 

Yet those attacks can be seen as a motivator for simplification, too. For example, individual health plans are going to have change the way they underwrite applications. Their ability to discover fraudulent applications is going to be extremely limited once lawmakers get done reforming the rescission process. With no back-up, the importance of underwriting at the front-end becomes even more critical than it already is.

 

This is a great opportunity to make enrollment applications simpler. Again, there are those who claim the applications are complicated to enable carriers to play “gotcha” with their members who later incur claims. They have no facts to back this up, but that hardly matters, especially when these critics get a lot of attention just for making the claim. Which means carriers are going to have to deal with this charge for quite awhile – or until something changes.

 

(What’s more likely to blame for complex applications is the same dynamic that haunts anything created by committee. When lawyers, underwriters, actuaries, and business managers sit down to create a form – especially one that needs to meet regulatory standards – that form is going to be bloated, complicated and annoying. No ulterior motive is required.)

 

Instead of spending time repeatedly repudiating the charge, however, health plans would be better served to move beyond it. The fact is, applications are more cumbersome and complicated than they should be. Carriers should work with their Departments of Insurance and an outside design consultant to come up with standardized and, even more importantly, simplified underwriting forms. The forms should focus on making it as easy as possible for consumers to provide enough information for the carriers to make their underwriting decisions.

 

And that should be the explicit goal: easy sufficiency. This, in turn, means using simple language in a clear, concise manner. It means laying out the questions in a manner that flows and avoids asking for the same information repeatedly. It’s a lot easier to describe than do (I know, I tried once), but if made a priority, it’s doable.

 

When lawmakers, prosecutors and others are lobbing grenades your way it might be counter-intuitive to use the situation to focus on design. In reality, simplifying the touch points where consumers, agents and medical providers interact with the carrier is an extremely visible way of demonstrating a commitment to change. As important, it’s a vehicle for getting in front of the change that is inevitable.

7 thoughts on “Making it Simpler: Reinventing Individual Health Insurance

  1. “There are a lot of slippery slopes in reform but something has to be done because status quo is just not the answer. Definitely an uphill battle. Great post.”

    While i certainly agree with this statement. I Can think of one or 2 thing that are not so bad about that status quo.

  2. Alan, thank you for this post! I have been an advocate for uniform disclosure legislation in the health insurance industry for years. Some other thoughts I have on our current system and the future are as follows:

    One of the biggest problems with today’s healthcare debate is that we have two separate factions vying for control; the politicians whose prime objective is winning votes and support and the insurance companies whose prime objective is making a profit. The politicians espouse grandiose visions of universal healthcare for everyone without focusing on who will pay the bills, and the insurance companies preach freedom of choice and a privatized system while increasing rates and cutting benefits. The average consumer is caught in the middle with a big screw being constantly driven into the heart.

    The question in this writer’s mind is “how do we bring these factions together to create an improved and functional healthcare system?” How do we create affordable healthcare for everyone without the healthy having to pay for the sick; the rich having to pay for the poor? The only real answer is compromise.

    Let’s start by looking at the current system. One of the biggest problems that I face as a health insurance broker/consultant is the lack of uniform disclosure legislation requiring all insurance companies to state benefits and exclusions in a complete and uniform manner. Some plans may exclude certain services that others may not. Some plans may not even offer an out of pocket maximum liability cap. Many times, possibly by design, the consumer is not made aware of these “exclusions” when purchasing a policy. Too often it’s all about making the sale. It is this writer’s opinion that insurance companies should be required by law to uniformly state the major benefits and exclusions of their plans without all the asterisks and fine print. I believe that an educated consumer who knows the limitations of the plan he or she is purchasing can make the proper decision on how to manage healthcare.

    I also believe that there should be uniformity in legislative control as opposed to individual state management of healthcare. It is rather absurd to me that a person residing in California cannot transfer a policy to another state should he or she move to say Arizona. Federal legislative control will lead to more uniformity and better understanding for the consumer. Yes, this will require change from the insurance carriers, but some change is necessary and inevitable.

    In order in guarantee coverage for the poor and the ill, a study should be undertaken to determine cost of universal care clinics to treat the poor and subsidies to assist in paying for those whose medical conditions preclude them from procuring individual coverage. The care clinics can be along the lines of what is being proposed and initiated by several large retailers where clinics are manned by registered nurses with rotating physicians on call for treatment of more serious issues. Those with certain declinable medical conditions would be eligible to receive subsidies to assist in paying higher premiums necessary to offset the overall risk factor involved in issuing them coverage.

    In summary, this writer believes that a combination of universal healthcare and a privatized healthcare system should be the ultimate objective. Health insurance for everyone is a worthy and noble goal for this country. However, unless the insurance companies and the politicians can find a way to create compromise, the current system runs the risk of shifting to a much more costly system of healthcare management, and no one is focusing on the amount of this cost and who will be responsible for writing the check. There is no doubt that the American public in general is fed up with the current system, however they have not been offered alternatives that will actually work and be functional. It’s time to set aside the politics and profit motives and find a way to create positive and functional change.

  3. Right now the best resource that an applicant/member has for simplifying the system is an independent agent. Besides the complexity of the applications, claim forms, and EOB’s the process of selecting a plan is not always clear cut and easy to understand.

    So many people will visit a carrier’s site or a massive agency’s site and will never speak with a live person. They select a plan from the deli menu that often is not appropriate for them or their family. They get no advice about pre-existing conditions, surcharges. In the end, they are unsatisfied with the carrier’s decision or they end up in the wrong plan.

    The system is convoluted, but that also means there are many opportunities to benefit applicants and members. As long as you have a good agent and you use their talents and know-how. Thank you for bringing up these overall topics.

  4. There are a lot of slippery slopes in reform but something has to be done because status quo is just not the answer. Definitely an uphill battle. Great post.

  5. Simplifying health care in the US is not going to be a task for the faint of hearts. Many key players (government, insurance corps, businesses, hospitals, consumers) must be on the same sheet of music for a change to ever take hold. And the combustion fuel for this change, information gathering and dissemination.

    Mark Goodman conveys a point that illustrates why information is so vital for change to come in the current system, “Consumers shopping on line and who choose not to work with an agent buy at their own risk. Generally their research comes down to buying the cheapest. Then they find out what they bought when they are stuck and can’t move.”

    Then, the ultimate question is asked, who is responsible for providing this information to the public? The answer lies in the total commitment from all the key players involved in the system to dedicate there efforts to change. This change will generate rewards, for all involved, which greatly out weighs those that are being generated in our current system.

  6. Wow, I can see we’re well on our way to reform!. How is this going to get Insurance to the people who can’t get Insurance, and if they can, at an affordable price? Health Insurance in this country is all about making Money, it’s not about helping people. All they care about is their stock performance; enriching the few executives, investment houses and wall street insiders. If this country cared about it’s people, we would have a Universal Health Plan, and it would not include Insurance companies. The people who run Insurance are evil, they say they’re not but they are!

  7. The P&C industry has done a much better job standardizing the application process. Almost all business regardless of carrier is submitted on an ACORD form. It is somewhat hard to comprehend how our end of the industry continues to choose the independent path.
    I can’t imagine this can’t be addressed quickly and efficiently.

    Consumers shopping on line and who choose not to work with an agent buy at their own risk. Generally their research comes down to buying the cheapest. Then they find out what they bought when they are stuck and can’t move.

    Along with standardizing forms standardizing coverage should be part of the political discussion. I am not suggesting one plan fits all but like Medicare Supplements you pick an alpha and you can make a concise benefit comparison. Carriers would win customers with network, price and service (not in any order).

    At a carrier seminar last week the network manager was saying facilities were looking for 100%-200% increase in negotiated fees.
    The clock is ticking and we as an industry have to show leadership and the ability to welcome and embrace change.

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