Throughout 2005, the individual health market has been redefined by a new set of industry expectations that are shaping the way we do business. This year was characterized by consumer growth, plan diversification, increased carrier competition, and a greater emphasis on integrated Web-based selling. Today's individual health market carriers have been working faster, harder, and smarter to meet the needs of a rapidly changing market.
The Kaiser Commission on Medicaid and the Uninsured in November 2004 reported that there are 45 million U.S. citizens without health insurance. These well-publicized numbers get more interesting when it is noted that nearly half (44%) of the uninsured persons are adults between the ages of 19 and 34. Most important, the data show that the 19-to-24 year-old demographic owns the highest percentage of individual insurance when compared to other age groups, but nearly one-third, or 7.6 million, of this segment are uninsured.
These statistics caught the attention of large group health carriers. Five years ago, few large group carriers were interested in this field, but today most major group carriers offer several individual health products. The writing was on the wall in their primary market as well because more employers have stopped offering traditional group health plans and instead suggest alternate kinds of coverage to their employees, such as HSAs or HRAs. In fact, according to the Kaiser Employer Health Benefits 2004 Annual Survey, only 59.8% of U.S. citizens had employer-based health insurance. This is the fifth successive year that private employment-based health insurance coverage has fallen, and most noticeably now that it is below the 60% mark. Many have concluded that the growing market for health insurance is the individual health market.
New Market Segment Opportunities
Carriers entering the individual health field focused on the latest numbers and began more actively targeting the uninsured market. While everyone realized this untapped market existed, this definitely was the catalyst that began the trend to redesign and market plans to this particular segment. Plan designs in the past clearly were geared toward the self-employed -- even government-sponsored MSAs reflected this notion -- but the shift has been made to make plans more affordable and accessible to attract the uninsured population.
While the individual health industry traditionally has done a good job of catering to the persons who wanted more rich, comprehensive plans and could afford them, this new target audience needed more choice. Young, healthy persons do not want to pay a high premium for benefits they don't think they'll use. The market quickly has responded to this segment by designing lower cost basic benefit plans that meet these people's needs. In recognition of this need, Celtic Insurance Company introduced the Celtic Basic plan that provides reasonable deductible choices, couple copay office visits, an affordable prescription card, and a high lifetime maximum. These kinds of plans are helping carriers grow their portfolios and address a gap in the individual health market.
Enhanced Web and Service Capabilities
Carriers also quickly realized that the Web offers the perfect opportunity to market these new plans to this segment. There is a higher incidence of this targeted audience on the Internet, and it also is their preferred means of doing business. Carriers have stepped up their resources to create instantly appealing Web sites to capture this young audience's attention. This increase in Web-based selling has created more price-driven competition in the industry than in years past. This is a trend that looks destined to continue and certainly will influence future product development efforts and keep carriers bringing new or enhanced plans to the market quickly.
The importance of Web-based selling hasn't gone unnoticed with the agent population. Carriers are equipping their agents with more transactional-based tools to use on their own sites. For example, our WebLink Program provides appointed agents with one link that contains product information, quotes, provider directory listings, and online applications -- everything their client needs to complete business right from the agent's site.
In addition, the Web has become an effective service tool for agents because it offers a superior means of support to track and manage their business online. Carriers are supplying more information online for agents to access at a time that's best for them, in a format that's easy to use and understand.
Another easy-to-use service, the teleapp, gained acceptance with agents in 2005 and aids them in the selling process. Like the Web, the teleapp service is paperless and a more automated process for gathering information. Clients enjoy the convenience of applying over the telephone, and agents enjoy dealing with less paperwork.
It's the Right Time to Be an Individual Health Agent
The many changes occurring throughout the industry are good news for consumers and agents. The targeted focus to reach an underserved market segment has created new, affordable product offerings that ultimately appeal beyond a young audience. Carriers also are better meeting agents' needs with more advanced Web-based applications and account management tools. And they're devoting resources to develop and implement tools and services that make selling easier. It's the right time to be an individual health agent and watch your book of business grow.
James P. Daly is the chief operating officer and executive VP of Celtic Insurance Company. In this position, Mr. Daly leads the Celtic Individual Health strategic business unit. He joined Celtic in 1986 and has more than 30 years of insurance industry experience. He is a member of America's Health Insurance Plans' (AHIP) Individual Health Insurance Committee and serves on AHIP's Individual Market Technical Task Force.
