Insurance Exchanges and Older Consumers
With the passage of the Patient Protection and Affordable Care Act (PPACA) in 2010, Americans were introduced to a relatively new way to purchase health insurance - the exchange. A government-regulated exchange is publicly run by either the state or the federal government, and is an online marketplace where individual consumers and small employers can research different tiers and levels of health insurance and then make a purchase that suits them best. In addition to government-run healthcare exchanges, we have seen a number of private exchanges enter the market. Unlike the government-run public exchanges, private exchanges are run by insurance companies, brokerage or consulting firms.
Notably, another trend is now becoming more prevalent: private senior exchanges. Employers are using these exchanges to offer retiree-aged employees the opportunity to purchase supplement health insurance products, such as Medicare Supplement and Hospital Indemnity. With this newly available marketplace for senior insurance products comes a need for insurers to understand older customers’ purchasing preferences. Our recent research on insurance exchanges offers insights into some of those to be considered.
When we talk about older employees and seniors in the same sentence as exchanges, a comment that I hear often is that they are not as comfortable with technology as Millennials and may shy away from using an exchange to purchase an insurance product. While it is obvious that Millennials are more comfortable with today’s technology, it doesn’t mean that older Americans are refusing to use technology in their daily lives. In fact, 80% of Baby Boomers (those born between 1946 and 1964) use the Internet, while 71% use at least one social network site.1
In our research on consumers and insurance exchanges we segmented the participants to focus on the older consumers (ages 61 - 65 who are employed), to find out if certain stereotypes for this particular age group ring true.
We found that these older employees have actually accepted exchanges and realize they are here to stay. They seem to be comfortable buying insurance through an exchange; however, they are concerned about the decision process leading up to the actual purchase. Older employees want to be sure that they are making the right choices about their benefits and don’t always have the confidence to make the decision alone.
We also learned that all consumers, regardless of age, do some research before buying insurance on an exchange. This means that learning tools are an important part of the overall experience. However, the types of tools a consumer values will differ by age. Older consumers still want to speak with a live person at some point in the process in order to validate their decisions. A comment we heard from a number of people is that the process is “overwhelming” and they need help in making the right decision.
We believe that the online marketplace - exchanges - will continue to evolve to address the needs of the consumer. However, whether private or public, the exchange must recognize that not all consumers are the same. Older employees may have accepted the idea of an online marketplace but that doesn’t mean they will use it unless they have the supporting tools to feel good about their purchase before pushing the “buy now” button.
Also, for more insight into the Boomer perspective, look for our upcoming series later this summer.