Understanding consumer preferences can help capture value in the individual market

Articles

As consumers gain experience purchasing health insurance in the individual market, their attitudes are evolving—and so is the market. McKinsey’s 2016 Individual Market Open Enrollment Period Consumer Survey reveals the changes.

Implementation of the Affordable Care Act (ACA) has given millions of US consumers  access to a new health insurance market-place. As consumers who purchased health plans through the public exchanges have ex-perienced the benefits and consequences of their selections, their attitudes about coverage have been changing. By understanding these changes, payors can develop better strategies for competing on the 2017 exchanges.

To investigate this issue, we conducted a  survey of consumers eligible to purchase ACA-compliant coverage just after the close  of the 2016 open enrollment period (OEP).The survey was taken by 2,763 consumers,  of whom 1,187 said they had bought ACA plans, also called qualified health plans (QHPs). Another 500 respondents had purchased non-ACA plans, and 1,076 remained without health insurance. (For more details about the survey, see the appendix.)

Results show that consumer preferences for coverage types are contributing to a  gradual evolution of the individual market, rather than an abrupt rebalancing. Movement between coverage types has been relatively limited: nearly three-quarters of the respon-dents who said they bought ACA plans in 2016 reported having had similar coverage  in 2015, and 87% of those who said they were uninsured in 2016 had also lacked coverage  in 2015.2 Comparatively few respondents said they purchased health insurance for the first time in 2016 or switched from a non-ACA plan to an ACA plan, even though insurers discon-tinued transitional plans in several states.

However, a closer look at the purchasing  decisions made during the 2016 OEP reveals changes in consumer behavior that could have important implications for the next OEP. In this paper, we focus on the attitudes and behaviors of insured and uninsured consumers.3 In addition, we briefly discuss “payment stoppers”—individuals who signed up for 2015 coverage but halted premium payments  before the year was up. We also describe steps payors and providers can take to help increase enrollment and minimize the risk  that consumers drop coverage.

  1. An ACA-compliant plan, also called a qualified health plan, is one that complies with the Affordable Care Act’s regulations, including requirements that it cover ten essential health benefits and have no annual or lifetime coverage maximums. Our  definition includes all ACA-compliant plans, whether purchased on the public exchanges or elsewhere. A non-ACA plan is one that does not fit the regulations of the ACA and may be short-term coverage, a hospital indemnity plan, a transitional  or grandfathered plan renewed from before 2014, or other.
  2. Behaviors and experiences measured by our 2016 Individual Market OEP Consumer Survey, like the surveys we conducted after the 2014 and 2015 OEPs, are self-reported. Thus, the results may be subject to recall bias.
  3. Our consumer research has enabled us to segment the population of people eligible for an ACA-compliant plan in different ways. For example, we can identify differences in behavior between consumers who renew ACA plans with the same carrier and those who switch carriers, or between those who are new to an ACA plan from those who are new to health insurance altogether. For more information about these segments, see “2016 OEP: Consumer survey findings,” May 2016 (healthcare. mckinsey.com/2016-oep-consumer-survey-findings).