It's not every day that an industry has as many as 46 million new customers delivered to its doorstep. But when the U.S. Supreme Court voted 5-4 to uphold the Affordable Care Act (ACA) and the controversial individual mandate last week, that's precisely what happened for health insurance companies across the country.
The law has new hurdles to clear in Congress and the November election results could change the dynamic yet again--but the machinery of government is nonetheless lurching toward implementation as the American public grows more accepting of the new healthcare reality. Tens of millions of Americans who previously chose to forgo health insurance will soon seek coverage. Let the battle for their dollars begin.
That contest will be predominantly fought in the 50 state-run Health Insurance Exchanges (HIX) that the ACA establishes to provide individuals and small businesses with affordable coverage options from the industry's private carriers. The vast majority of U.S. states were waiting on the decision before passing legislation to establish their exchanges. But with the SCOTUS decision, most will begin propping up their exchanges by 2014 rather than allow the feds to step in and do it for them (a few ideological stragglers notwithstanding).
The influx of consumers is also problematic for the industry. With more high-risk patients on the rolls, insurers will need to offset increased costs by aggressively pursuing young, predominantly healthy consumers who would not enter the market but for the individual mandate. If they don't do so effectively, premiums will rise even as the exchanges introduce unprecedented levels of competition.
You don't need an advanced business degree to know what that scenario will mean. It is now incumbent on private insurance carriers to modify their marketing and communications strategies to navigate these new challenges. Insurers can no longer simply focus on large HR departments and other traditional customer funnels. They must reach a generation of American youth not entirely convinced of the value proposition.
Here are five strategic imperatives the will help private carriers carve out a significant slice of this still skeptical pie.
1. Understand that the individual mandate is anything but mandatory.
There is a sense among industry insiders that many young people will opt to pay the modest monetary penalty set forth by the individual mandate, rather than premiums for policies they don't think they need. The ACA implements a maximum yearly penalty of $695 for those who don't obtain health care coverage, which could look pretty attractive to potential customers in lieu of policies they don't believe they will use.
As such, insurers cannot just articulate coverage details or the pricing advantages of their policies. They must also show that it's too great a risk to decline coverage. Carriers need to discuss the importance of preventative care; how spending a little on routine doctors' visits can save your life; and the monumental costs young people will incur if they contract a serious illness or simply break an ankle.
2. Emote online.
Under the ACA, young health insurance consumers are now able to rely on their parents for coverage until they are 26--but they will rely on the web thereafter. The 27-35 year-old demographic is, of course, a digital animal. That means insurance carriers must now begin a new race to be found and chosen online.
Which companies will dominate search engine optimization (SEO) and marketing (SEM) for the terms used to research their coverage options? Which companies will make effective use of blogs and social media to enhance awareness of and affinity for their offerings? Most important, which companies will generate the emotionally engaging video content that helps consumers immediately understand that the risk of not being covered is too high?
Two decades ago, the “Harry and Louise” television campaign blended information and a healthy dose of fear to effectively kill healthcare reform in the Clinton era. Today, the same approach can be taken--with the opposite end goal in mind--via YouTube and other venues that young people populate. When they emotionally connect to the benefits and risks of not being covered, they will get it. Action follows understanding.
3. Understand that "young people" is not one audience.
It's not enough to define this new audience as "young people." Insurance companies need to dig deeper and build brand identities that cater to the separate market segments under the "young people" umbrella. Whose brand will be known for the policy that is tailored to the young, single customer yet to start a family? Whose brand will be known for the policy that is tailored to small business employees? Whose brand will be associated with policies designed for 30-somethings with kids in tow or on the way?
Establishing connections between the brand and these microtargets will go a long way toward defining a policy as best in class. Here, the well-known brands have a head start because they are already viewed by many youth buyers as a safety sell. These companies can continue to leverage this trust and familiarity as they have in the past.
4. Localize outreach to 50 different exchanges.
Many young people will rely solely on the exchanges that will be set up in each state for comparative policy shopping. The devil will be in the proverbial details as each state will present coverage options in different ways. Some will highlight deductibles over yearly premiums. Others will focus more on coverage details versus price.
Insurers must therefore be keenly sensitive to how their brands look viewed through 50 separate prisms and either adjust their policy terms or market the competitive advantages of their coverage to address these varying local priorities.
5. Excel at customer service.
Most of us who have had health insurance for years still don't fully understand every nuance of our policies. From co-insurance to deductible rates, to the medical definition of an “experimental procedure,” today's first-time customers will be all the more perplexed by the restrictions in effect and the options on the table. They will have a myriad of questions and concerns.
Customer service will therefore be paramount to hold on to an especially fickle youth demographic and transform these buyers into life-long brand loyalists. Full transparency must be a priority to ensure that customers understand their coverage limits. For the healthcare industry, Sy Sims' maxim, that “an educated customer is our best customer,” is definitive.
Thanks to the Roberts court, an elusive market segment long coveted by insurers is within reach--but only for those companies that speak to the needs of young consumers, and do so in a language that educates, motivates, and inspires them to make the right choices.
Richard Levick, Esq., President and CEO of Levick Strategic Communications, represents countries and companies in the highest-stakes global communications matters — from the Wall Street crisis and the Gulf oil spill to Guantanamo Bay and the Catholic Church. Mr. Levick was honored for the past three years on NACD Directorship's list of “The 100 Most Influential People in the Boardroom,” and has been named to multiple professional Halls of Fame for lifetime achievement. He is the co-author of three books, including The Communicators: Leadership in the Age of Crisis, and is a regular commentator on television, in print, and on the most widely read business blogs. Follow him on Twitter and circle him on Google+, where he comments daily on brands.
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