As health insurers begin to leverage e-commerce principles, tremendous opportunities exist to build out attractive and varied product shelfs. One of the greatest advantages of an e-commerce business model is that it enables site owners to add revenue by extending their product shelf to include related products. That’s why airlines now help you rent cars, book a cruise or get a hotel room. Affiliate partners allow a site owner to better meet their consumers’ needs and provide a new revenue stream based on affiliate fees.
Health insurers are perfectly positioned to apply this same model. After all, health insurance shoppers are also keen to purchase dental, vision, disability, critical illness, savings accounts, pet insurance and more.
Consumers want choices
Conventional wisdom in the health insurance industry often points to premium price as the deciding factor for consumers. Not true according to a recent McKinsey & Company report. In actuality, consumers want to mix and match health and voluntary insurance products – and are willing to pay more to do so. The research revealed that employer-sponsored consumers spent an average of 40 percent more than the employer contribution to obtain voluntary products, such as vision, life, and critical illness. Add to that, data from private exchange operators as well as ancillary vendors show that those who purchase a HDHP through a private exchange are highly likely to also purchase at least one ancillary insurance product.
Private exchanges make it easy to add products
When insurers use a private exchange for commercial group and individual business, they have more opportunity to offer a wider range of products. Insurers see this as a big benefit to their members. Fifty-nine percent of respondents to our 2015 Health Check Survey, believe that the availability of voluntary products will lead to an improved consumer shopping and enrollment experience on private exchanges. The possibilities continue to increase. Today, insurers may offer products such as disability, life, critical illness. Down the road, this will likely expand to include pet and legal insurance, financial products and even gym memberships to support wellness programs.
Since margin generated by non-medical products is not subject to Medical Loss Ratio (MLR) requirements, there are financial benefits to the health insurer for offering them on an exchange. Also of note is the additional potential for cost-savings and efficiency gains when insurers use their private exchange to manage enrollment and ongoing updates for these multiple vendor products. By leveraging a variety of information exchange methods – including complex interfaces, standard electronic data interchange transactions like the HIPAA 834, and simple file formats – a private exchange offers a platform for smooth and cost-effective integration.