To sell successfully within the Affordable Care Act(ACA) exchanges, insurers need to understand and apply the basic principles of consumer marketing.
Open enrollment for individuals and smalls businesses looking to purchase health insurance coverage through the ACA exchanges begins October 1st and continues through the first part of next year. Like any other product or service sold in a competitive landscape, insurance companies will calculate how much of the consumer pie they can own and how many policies must be sold to be profitable. Tens of millions of individuals nationwide will be required to have insurance by 2014 to avoid tax penalties, and their entrée means potentially billions of dollars in revenue for the health care industry.
Smart marketers believe in the concept of channel cross-pollination. Use key learnings from one consumer industry or channel and apply it to another unrelated field. Successful strategies that worked with soap can be used to drive Subaru sales. If we want to sell health insurance, it behooves us to study how the same purchasing audience buys cornflakes.
The cornflakes brand manager first considers how many boxes the company expects to sell without the assistance of marketing. From there, he/she formulates marketing strategies designed to drive purchase beyond the initial baseline sales estimate. If the projected goal (theory) is not happening on the shelf (actual sales), the size of the marketing spend the company puts toward moving boxes off the shelf can increase substantially.
Often, the sense of urgency is driven by product life. Purchase timing is especially important when the window for products or services will expire (tickets to a concert), are perishable (milk) or both (Halloween candy). From both a trade and consumer viewpoint, enrollment in the Affordable Care Act's health insurance program is a time-sensitive purchase.
In the state of California, a little more than 7 million residents are uninsured. For sake of argument, let's assume that only 1 million residents buy insurance through California's ACA health insurance exchange, Covered California. Thirteen insurance companies will be selling policies through the exchange, all fighting for consumer's attention. The average standard individual policy's monthly premium (the amount individuals pay to insurers whether they use medical services or not) is estimated by Covered California to be between $304 and $321 per month. Multiply those numbers against 1 million new participants every month, and the potential annual revenue is significant.
Let's say you're the individual policy brand manager for Blue Shield of California, a major insurance player in California. You want to keep your job, which means you need to sell a lot of individual policies. The calendar reads December 1, 2013, and you're falling well below the company's projected individual enrollments. If you were in the cornflakes business, you're look to one of a host of marketing strategies to increase sales. You might decide to distribute coupons, run a "Win your own dairy and have milk for your cornflakes for LIFE!" sweepstakes, or motivate your sales force with cash incentives. Provided your promotional efforts don't risk damaging the brand image, few if any tactics are off the table.
But alas, you're not selling cornflakes. You're attempting to navigate the uncharted waters of ACA individual and small business health insurance sales with a host of other competitors trying to win over the same consumers. Still, the basic sales and marketing principles applied in a variety of other consumer industries can boost your sales. How do you set your product apart and get consumer buy-in is tantamount regardless of what it is you're selling. Because of the "apples to apples" comparison shopping that is expected to be available to consumers through ACA exchanges, insurers who are on par with or fall short of competitors' on price will have to look to marketing to deliver added value to prospective purchasers.
Will insurers that fail to make their numbers by December offer cash incentives to consumers like car dealerships trying to clear a lot for new models? Will savvy shoppers wait to enroll in December to see if there is a last minute sale or other Value Added Proposition (VAP)? Or, will so many people enroll early that some insurers meet numbers early and don't feel compelled to woo additional members? Only time will tell.
To avoid penalties, uninsured consumers should be enrolled by 11:59:59 December 31, 2013. At present, there's no tangible motivation for consumers to enroll one nanosecond before that time.
So what should savvy consumers do?
It might be a good idea to wait and see how badly insurers want their business. There might just be a limited time only New Year's Eve close out sale in their future.
Sources: Covered California, healthinsurance.org
Sarah O'Leary a tenured marketing expert, entrepreneur, and lecturer. She can be reached via email, email@example.com.