The Health Insurance Marketplace provides a space that allows small and mid-sized health plans to compete with even some of the larger insurance provider giants. The playing field and requirements for all insurers makes participation lucrative for any size insurer. But to really see how well the smaller and medium-sized health plans are competing in today’s environment, we dove into the details. It turns out, there are key advantages many of the less-than-goliath companies are leveraging. And yours can, too!
Small and Mid-Sized Health Plans Have Been Coming to Compete for a While
Looking back to data from before the pandemic, the writing was already on the wall. Small and mid-sized health insurers were already diving into the Marketplace. Back in 2017, some sources suggested that nearly 83 percent of the entire market represented small and medium payers. That’s 409 of the 493 available plans at the time. Those insurers roughly covered just shy of 500,000 Americans. The SMB market penetration that year was mostly due to managed Medicaid, Medicare Advantage, and provider-sponsored plans.
Medicare Advantage plan offerings may have driven the spike in SMB participation back then. In fact, 35 percent of those SMBs offered a Medicare Advantage plan. But there was a growing trend of smaller payers entering the Marketplace to compete. While the ten giant health plans of the day represented 60 percent of the revenue, the small and mid-sized health plans saw the opportunity to capture their portions of the pie.
Fast-forward to 2019, and it was clear the costs for healthcare were on the rise. Employers enrolling in group plans were seeing spikes in participation costs. Individuals continued to see rising health insurance premiums, as well. The average family premium already jumped 55 percent from 2008. And while the larger insurers were dominating the markets, the SMBs saw the skyrocketing rates as the perfect competitive advantage. Any health plan able to increase the quality of coverage for less would see increased ROI.
Times and Policies Change, and So Do SMBs
Today’s economic environment is vastly different from years past. And the small and mid-sized health plans have proven to be nimble in adjusting. After all, it takes less personnel and defined processes to steer a rowboat than it does a yacht. And that advantage has thrust success in the direction of the smaller providers.
There is a culture change happening now, and some of the large insurance providers are slow to react as a result of their size alone. Changing with the times means having an organizational plan in place with action steps. The giant companies tend to require more time to make these adjustments. Communication is a much simpler process for smaller businesses, as well. Decisions can be made quickly and efficiently, including those that are necessary for improvements. The SMBs continue to compete because they zig quickly when others continue to zag. And hitting the brakes on a mistake or a flawed process is easier when there is a fewer number of staff members involved.
Another critical advantage small and mid-sized health plans have involves their ability to offer member-centric service. When health insurance enrollment and claims process effectively, any sized payer can succeed. But when there are issues, technical setbacks, or challenges, it’s the smaller organizations that tend to manage better. Focusing on delivering helpful service and actionable solutions can be more difficult for the giant plans, with call center teams and outsourced partnerships for delegation.
Focusing on What the Large Providers Can’t Offer
Smaller health plans have a distinct size advantage when it comes to innovation. Bringing in new tools to improve member experience, for example, can be a swift decision and implementation process. The large plans will often require additional time to secure permission, announce new protocol, and put tools in place. Alternatively, when something isn’t working well, an SMB can make a quick move to terminate and redirect, while the big companies take weeks or months to unplug a poor performing offering. This quick decision-making for small and mid-sized health plans can translate to less risk when innovating. It also allows them to sometimes offer what the larger providers can’t.
For many individuals seeking coverage and businesses considering group plans, simplicity matters. If engaging with a health plan requires too many steps, a series of authorizations and a call center that transfers questions to various team leads before a solution can surface, it just won’t be popular. Smaller providers can simplify nearly every phase of the engagement process logistically. Those investments can offer immediate results as individuals and companies look for better efficiencies. Simplified approvals, claims processing, and premium assessments can often be the competitive differentiators SMBs leverage most.
Market precision also helps the smaller insurers find niche opportunities for growth. Larger health plans may not justify exploring certain regions because their ROI benchmarks are high. Small and mid-sized health plans see revenue potential in various markets that allow them to compete successfully. This gorilla marketing move is proving lucrative for those health plans not bound by stricter ROI guidelines.
Investing in Better Technology
Remember how much easier hailing a ride became with the introduction of Lyft and Uber services? Standing on a street corner to chase down a taxi seems almost barbaric now for many. Technology drives innovation and competition. When it comes to competitive innovations in the health insurance industry, those payers capable of enhancing technology for better processes and services will always surge ahead of the rest. From artificial intelligence to automated member services, small and mid-sized health plans are seeing real results from tech investments. Limiting friction between members, healthcare professionals, and provider engagements alone allows SMBs to transition ahead of the giants.
For those small and mid-sized health plans looking to explore some of these competitive advantages, Softheon is here to help! When it comes to harnessing software solutions and core technology that reduce costs, overhead, and time, having the right partner matters. Contact the Softheon team today to see how we can help you realize some of these pivotal benefits.