According to a number of estimates, the current individual market in the healthcare insurance space is about 20%. This is expected to go to over 60% in the next 5 years. That is a three -fold increase in a pretty short span of time. Health insurance companies are shifting a lot of gears to move their business models from a B2B paradigm to a B2C perspective.
It is expected that small groups (defined as groups with less than 50 members) would lead the charge toward consumerism. With the new ACA taking effect, convention wisdom suggested that small groups would drop coverage first…and in time, we might see an increasing tide towards the individual market.
Interestingly, there are some interesting twists already underway that might challenge these assumptions. Walgreens has announced that they are moving toward a “defined contribution” model and moving towards a multi carrier private exchange. This means their employees can choose between a set of competing health insurance companies. Is the next step moving on to the public exchange?
In discussions with friends, I was also surprised with another development. Till last year – it was standard fare to provide three basic plans: PPO, HRA and HSA. It was interesting to note that at least two Fortune 50 organizations have dropped the PPO plan altogether. In its place is offered an “ACA compliant health plan”.
There are projections – and then there is the reality. My points above are leading indicators of what is to come. While projections say it might be five years for the individual market to triple, reality might be much sooner. Consumerism in healthcare is coming…and before you know it, you’ll be seeing it in a theatre near you!