From ACA to Medicare: 5 Answers to Healthcare Marketers’ Legal Questions About Insurance

As healthcare marketers and communications professionals, this swirl of forces hits close to home. Are you able to describe the various paths of reform to internal or external audiences?

In the spring of 2010, healthcare marketers saw the Patient Protection and Affordable Care Act (ACA), nicknamed ObamaCare, become law. It was the largest expansion of health insurance coverage since the establishment of Medicare and Medicaid in 1965. More than 50 years have passed since healthcare became more accessible, yet it remains a fiercely debated topic among politicians and is now the No. 1 concern among voters, according to a new poll from RealClear Opinion Research.

The tug-of-war between those who view healthcare as a guaranteed right and those who believe the government should have a minimal role is shaping up to be a driving force in the 2020 election. The processes used to “right-size” the government’s role shows we remain deeply conflicted. Court cases in different jurisdictions return victories and defeats to both sides. Voters generally approve Medicaid expansion when it’s on a state ballot, but elect federal representatives with divergent views. Why is this still so complicated?

The U.S., which has the world’s most powerful armed forces, spends 3.6% of its gross domestic product (GDP) on the military. Contrast that with the 18% of GDP spent on healthcare, and you start to get a sense of the scale of the industry and the Rubik’s Cube nature of how its pieces depend on each other. Those who view healthcare as a matter of seeing the doctor when you are sick tend to see the upside in expanding coverage. Those who think of it in economic terms tend to worry about potential disruption to jobs, given that healthcare is the largest source of employment in many towns. And those who view it as a commodity tend to think the marketplace should be left alone to sort it out.

As healthcare marketers and communications professionals, this swirl of forces hits close to home. Are you able to describe the various paths of reform to internal or external audiences?

  • The ACA (today’s status quo): For Americans who do not receive health insurance through their employer, the ACA removed restrictions on individual policies, such as exclusions for pre-existing conditions, lifetime limitations on benefits, and widely divergent premiums based on your health. Of course, the ACA also set up online exchanges where you could see if you qualify for certain subsidies to help you purchase different levels of gold, silver, or bronze coverage. Some people objected to the “individual mandate” that penalized taxpayers as a means of encouraging them to get coverage. Since its passage, the penalty for the mandate has been reduced to $0.
  • Single-Payer: Single-payer refers to the federal government reimbursing physicians and hospitals for services provided to patients, but doesn’t explicitly tie the reimbursement amounts to those of an existing program, such as Medicare or Medicaid. The uncertainty creates financial uncertainty for providers. Single-payer would, for the most part, eliminate the role of health insurance companies, which advocates believe would save money on administrative “waste” and opponents see as removing choice from the marketplace. Consumers who have “skimpy” health coverage might have more services covered under single payer, while those with richer benefits through commercial insurance might have fewer services covered.
  • Medicare-for-All (multiple flavors): Medicare-for-All is an expansion of an existing federal program accepted by almost all providers. Several proposals generally fall under the “Medicare for All” moniker, making it more complex to sort out. The name gives the impression the covered benefits would be similar to original Medicare parts A&B, but most proposals envision benefits like those available through Medicare Advantage, with benefits for vision, dental, and prescription drugs. Some proposals use traditional Medicare as a starting point for calculating reimbursements, while others use a more ambitious “global payments” approach for hospitals and standard rates for other types of providers. Consumers could purchase supplemental insurance to access services that are not covered. There would be no monthly premiums because tax revenues would cover costs. Medicare, Medicaid, and CHIP would be discontinued in favor of Medicare-for-All.
  • Medicare Buy-in: Medicare Buy-in is a smaller expansion of Medicare than envisioned under Medicare-for-All. This proposal would allow people 50 years old and over to pay a premium for the coverage provided under traditional Medicare or Medicare Advantage. The buy-in premium would be expected to cover 100% of administrative and benefit costs, although the enrollee may qualify for subsidies that bring down monthly premiums. Consumers could also purchase supplemental coverage, preserving a role for commercial insurance companies for that segment, as well as for younger consumers. Reimbursement rates for providers would mimic Medicare payment rates.
  • Universal Coverage: This is a goal rather than a pre-defined approach. As the name implies, Universal Coverage means everyone has access to healthcare, but it does not necessarily mean all services would be covered and it does not specify which of the above methods would be used to achieve it. In some countries, Universal Coverage also means that the government would control pricing, which critics say leads to an overall decline in the quality of care and advocates view as being more socially equitable.

As the debate over healthcare heats up — yet again — it may produce confusion and fear among people who have come to depend on specific programs, even if those programs have well-known flaws. Real change isn’t likely until after the 2020 elections, and the direction of that change will depend on who voters send to D.C. to represent them. In the meantime, be prepared to answer a lot of questions from worried patients.

Customer Experience Failure, Times 2

Here are two instances of poor business practices that lead to customer experience failure — from the same insurance company.

customer experience failure
Credit: Pixabay by Mona Tootoonchinia

Here are two instances of poor business practices that lead to customer experience failure — from the same insurance company.

My sister-in-law (SIL) has been a client of this insurance company since moving back from England 17 years ago. She has maintained both home and auto insurance throughout the 17 years. A couple of weeks ago, she received a letter letting her know they were going to cancel her homeowner’s insurance because her house was vacant. This was news to my SIL, because she’s lived in the house since September 2001.

My SIL goes by her middle name, and the insurance company had her first initial on the auto policy and her middle name on the homeowner’s policy. So the insurance company’s data stewards hadn’t noticed in 17 years that this is the same person at the same address.

Get your master data management practices in order.

Needless to say, my SIL is surprised and disappointed in this customer experience failure. I suggested she get quotes from other providers.

Insurance CX, Round Two

About the time this is occurring to my SIL, unbeknownst to me, I receive a letter from Trinet, my employment management company, with a special offer from MetLife. Because I had not checked rates in a number of years, I decided to get a quote from MetLife for my auto and homeowner’s insurance. I was stunned when it came in at $1,180 less than I was currently paying annually.

I called my insurance provider of 35 years and told it about MetLife’s quote. My provider said that sounded good and they could come down $200.

Thirty-five years = $200.

Sorry, my loyalty only goes so far.

I look forward to saving nearly $100 per month on insurance, as well as following the disruption of insurance as FinTech moves from banking to insurance, providing a better customer experience, more quickly, at a significantly lower cost.

The ‘Aging-in’ Opportunity for Healthcare Brands

Healthcare marketers might focus on the 65 and up segment because of perceived near-term needs that will generate revenue quickly, or they might target much younger adults to earn maternity and pediatric customers in the hopes of larger CLV. But there’s a middle group who may be more persuadable: The younger aging-in population.

Health systems increasingly use return on investment (ROI) metrics as a means of instilling discipline into the marketing function. In turn, a marketer might focus on the 65 and up segment because of perceived near-term needs that will generate revenue quickly, or they might target much younger adults to earn maternity and pediatric customers in the hopes of larger customer lifetime value (CLV) estimates. But there’s a middle group who may be more persuadable: The younger “aging-in” population.

I’m not referring to “aging-in” in the almost-ready-to-sign-up for Medicare sense, but rather to the 50-64 year old population that often seems overlooked in health system marketing plans. This demographic is working, has seniority with their employer, has favorable commercial insurance, and is starting to consume more health services. They are starting to pay attention to the health category.

This segment combines the tail-end of the Baby Boomers and the leading edge of Generation X. Their life experiences were shaped by hard rock, disco and pop music, political scandals, gas lines, economic booms and the Great Recession. And even though they may now take blood pressure or cholesterol medications, they maintain a self-perception of being younger and are looking forward to this window of time between the kids finally moving out and the contemplation of retirement.

So, how do you persuade them? Targeting from a media perspective is relatively easy. The harder part is avoiding the clichés of ‘senior marketing’ that turn-off this segment. Here are three tips:

  • Don’t overly focus on age as part of your visual or narrative message. This group intellectually understands they are getting older, but attitudinally pushes back on messages that seem designed for the ‘senior’ set. This is an important distinction from older segments that embrace the ‘senior’ designation and silver-haired imagery.
  • Focus on their motivations. These prospects are interested in experiences large and small that they may have previously delayed. The emphasis is on the ability to ‘do.’ This is strongly tied to a person’s motivations for new experiences and why your clinical service line needs to be in the context of enabling an engaged lifestyle with minimal disruption.
  • They carry a sense of responsibility. This segment will go online to do research and can be cynical about superficial content, so make sure there’s a “there, there” when they land on your campaign page. This group solves problems at work and will approach a service line in the same way. Once they land on your page, your content needs to be structured to allow for deeper dives into volume/quality, return to work speed, how to access, cost considerations and next steps.

The 50- to 64-year-old aging in place segment represents a strong segment with favorable income and insurance, rising health needs and an increasing wiliness to listen to your message — as long as you don’t make them feel old.

The FinTech Revolution That Wasn’t: How Financial Institutions Co-Opted Their Disruptors

It’s the disruption that wasn’t. According to a World Economic Forum report released this month, FinTech firms have not found the traction to overthrow incumbent large financial services institutions. In fact, these technologies have actually strengthened them. Here’s how.

How Financial Institutions Co-Opted FinTech

It’s the disruption that wasn’t. According to a World Economic Forum report released this month, FinTech firms have not found the traction to overthrow incumbent large financial services institutions. In fact, these technologies have actually strengthened them. Here’s how.

Too Big to Disrupt?

We often think of start-up companies as the most dangerous things to existing institutions. You only have to look as far as Amazon and Uber to see the impact lean, tech-centirc entrepreneurs can have on legacy industries. But the new report “Beyond Fintech: A Pragmatic Assessment of Disruptive Potential in Financial Services,” finds this has not been the case in financial services.

The research team, — lead by World Economic Forum’s project lead on disruptive innovation in financial services, R. Jesse McWaters — examined the technologies that could potentially impact the financial services industry as we know it.

Their findings point to a financial services environment in which the large institutional players have so much customer inertia that the smaller FinTechs have had a hard time capturing market share. Meanwhile, the report says, “The rapid growth of the fintech ecosystem allows firms to externalize parts of their innovation function,” and, “The proliferation of fintechs provides financial institutions with a ‘supermarket’ for capabilities, allowing them to use acquisitions and partnerships to rapidly deploy new offerings.”

Where FinTech Succeeds and Fails

In summary, the report finds that FinTechs have succeeded and failed in different ways.

FinTechs have succeeded in:

  • Setting the pace, shape and direction of innovation.
  • Reshaping consumer expectations for service and the customer experience.

FinTechs have failed to:

  • Convince customers to switch away from their incumbent financial services providers.
  • Establish a new financial services ecosystem or lay the infrastructure that could support them in the future.

The net effect of FinTech thus far has not been to show consumers new ways they’d rather do things, but to show the existing institutions how they can provide new services for their clients. That’s a huge difference from how similar movements have impacted other industries. Looking market to market, you have to give financial services firms credit for getting on the bus before it runs them over.

Big Tech May Succeed Where FinTech Falls Short

While adding FinTech capabilities makes existing firms stronger, the report does not let them off the hook yet. In fact, it identifies ight major factors that could lead to disruption in the future.

Chief among those threats is the commoditizing impact of large tech companies taking over the plumbing work of financial institutions. While this will drive down overhead and improve the customer experience, thus enhancing customer loyalty, the report sees the shift as something that could eliminate market advantage and differentiation created by companies that do those things well already.

As data and processes become commoditized by “Big Tech,” and customers become more accustomed to the Amazon-like customer experience that could offer, financial services institutions could become more vulnerable to smaller companies and alternative platforms that allow for customized services and higher customer satisfaction.

In other words, the easier it becomes for customers to access equivalent or better services across a variety of platforms, the closer large financial institutions come to the book stores and taxi companies of yesterday.

Why MetLife Firing Snoopy Makes Sense

I got a work anniversary card in the mail a few weeks ago. Maybe I’m wrong, but I don’t think I ever received one of these before. Bright envelope, handwriting font and a greeting card inside. And, best of all, it has Snoopy and Charlie Brown.

I got a work anniversary card in the mail a few weeks ago. Maybe I’m wrong, but I don’t think I ever received one of these before. Bright envelope, handwriting font and a greeting card inside. And, best of all, it has Snoopy and Charlie Brown.

metlifecard_01It brought me back to when I was a kid. One of my relatives would send me a “Peanuts” card for my birthday, or some other special occasion. And, like lots of my friends, I loved reading that comic strip every day in the paper.

So, I was a little shocked the other day when I heard that MetLife, the insurance giant, was ending its partnership with the Peanuts characters after 30 years. Although the current contract runs through 2019, the company will roll out new branding starting next year.

MetLife plans to focus more on its corporate clients, like the benefits company that sent me the card.

Consumers? Not so much. That part of the business is getting spun off into a new company.

This all means no more Snoopy One blimp at big golf events, no more hearing Vince Guaraldi’s “Linus and Lucy” during the TV commercials. No more of the Peanuts gang in MetLife’s direct marketing.

It makes sense. A different audience may call for a different face. A new logo and slogan, too.

At the time the company began its partnership back in the 1980s, insurance companies were not seen in the same light they are today. As MetLife CMO Esther Lee said, Snoopy “make our company more friendly and approachable during a time when insurance companies were seen as cold and distant.”

So maybe it’s the right time.

insurancespokes_01Everyone has their opinions on how much the insurance industry has changed over the years. I’ll acknowledge that it’s not as stuffy and conservative as it once seemed. Maybe the GEICO gecko, Progressive’s Flo, and Farmers’ Professor Burke have something to do with that as well.

Each character in their own way reinforces the brand messaging of their company and how its products are positioned. And ultimately, each has to help explain in more detail, regardless of the channel, how the prospect gains from becoming a customer.

So, how about it, marketers? Is MetLife making a big mistake? Please share your thoughts below.

Irrational Customers and 2013’s Tip Top Marketing Campaign

Exhale, just landed from a jam-packed Direct Marketing Association DMA13 conference … You have to hand it to New Zealanders. For two years’ running, that nation’s marketing practitioners have nailed a Diamond ECHO from the Direct Marketing Association’s International ECHO Awards, which were presented last week during DMA13, the association’s annual conference in Chicago.

Exhale, just landed from a jam-packed Direct Marketing Association DMA13 conference

New Zealanders are Diamond
You have to hand it to New Zealanders. For two years’ running, that nation’s marketing practitioners have nailed a Diamond ECHO from the Direct Marketing Association’s International ECHO Awards, which were presented last week during DMA13, the association’s annual conference in Chicago.

This year’s top data-driven marketing campaign in the world was for ice cream maker Tip Top (Fonterra Brands Ltd), in a campaign created by Colenso BBDO/Proximity New Zealand called “Feel Tip Top.” According to the ECHO Award entry:

A 75-year-old local ice cream brand in New Zealand aimed to regain relevance and brand momentum using customer experience. New Zealanders flocked to Facebook for the opportunity to nominate friends, family members or colleagues to receive a personally addressed, hand-delivered ice cream. By encouraging folks to ‘feel tip-top’ and indulge in a sweet treat and fond memory with friends, Tip Top highlighted new flavors and sub-brands, exceeded its nomination goal by more than fifteen-fold, and turned around a 17.6 percent decline into 16.7 percent growth across all categories.

I guess I ought to “like” Tip Top on Facebook.

Solidifying DMA’s Books
During the Annual Business Meeting of the association, it was announced that DMA has streamlined and simplified its annual dues structure into six tiers—from less than $800 on the low end (startups, consultants and the like) up to $75,000 for US and global direct marketing leaders. DMA generated $22.5 million in revenue last year, compared to $20.7 million in expenses.

While at the Annual Business Meeting, President & CEO Linda Woolley spoke to the recently approved Strategic Plan of the association, where she reported advocacy, networking and compliance services are the three areas of focus for association activity in the year ahead. DMA recently (in late May) launched a DMA Litigation Center, which will look to help businesses cope with privacy litigation, and to fight patent abuse, among other legal issues. Outgoing DMA Chairman Matt Blumberg, CEO & chairman of ReturnPath, also announced that the new DMA Chairman for 2013-2015 (a two-year term) is Alliant President & CEO JoAnne Monfradi Dunn (congratulations to my client), who told members she plans to serve as an ambassador between DMA’s management and its members.

(Ir)rational Consumers
Dan Ariely, in a keynote session sponsored by The Wilde Agency, gave case after case where consumers were seen to act irrationally, and that marketers can influence outcomes (and response) markedly by designing and testing creative offers and incentives. One of my favorites was the offer by The Economist (I’m an avid reader) where potential subscribers were offered $125 for the print magazine, and $59 for an online-only magazine, and the online-only offer won. But when a third option was added—$125 for both the print & online magazine—that option was the clear winner.

When an insurance company wanted to sell life insurance policies, and try to convince persons to upgrade, it tried repeatedly to sell in copy the benefits of more coverage—but with little access. When it decided to include a chart that clearly showed the higher amounts of coverage available—that the consumer was foregoing at his or her existing amount of coverage—well, it resulted in a 500 percent lift. My takeaways: always test, find a clever way to visualize data and offers, and always expect the irrational as much as the rational. “Standards Economics are not the same as Behavioral Economics,” he said. Indeed.

Well, that was just from two page of notes from the conference—I’m still dissecting a dozen more sessions. I have to say, this was the first conference in many years where I was accompanied by a “newbie,” a practitioner on the brand side making her first DMA appearance. She had a lot to complain about—there were way too many great sessions on offer at the same time, and we tag-teamed a bit to cover them simultaneously where we could. I think next year, she’ll be bringing some of her colleagues.

Mark your calendar for San Diego for the last week of October 2014.

How Great Marketers Can Inspire Action

We, as direct marketers, often consider the people we’re selling to as our target market. But we’re selling to people, not targets. To generate response, it’s essential to understand underlying demographics and interests about your customer. While this is a starting point, it’s not likely the tipping point that leads to a prospect becoming a customer. Breaking through requires that you think deeply about your customer and lead them to the answer of “why.” Today we offer a new perspective on defining why

We, as direct marketers, often consider the people we’re selling to as our target market. But we’re selling to people, not targets. To generate response, it’s essential to understand underlying demographics and interests about your customer. While this is a starting point, it’s not likely the tipping-point that leads to a prospect becoming a customer. Breaking through requires that you think deeply about your customer and lead them to the answer of “why.” Today we offer a new perspective on defining why customers respond, along with recommended action steps.

A thought-provoking Ted Talk video of author Simon Sinek, titled How Great Leaders Inspire Action, elegantly speaks about the importance of the “why.” The title of this video could just as well have been “How Great Marketers Inspire Action.” Sinek describes a golden circle of “what,” “how” and “why.” The outside ring of the circle, where most marketers approach customers and prospects, is the “what.” The middle ring is the “how.” Direct marketers usually excel at filling in the “what” and “how,” as we translate features into benefits for the logical part of the brain.

But at the core of the golden circle, where decisions are often made in the brain, is the “why.” It’s the emotional response. If your messaging isn’t working, here’s a challenge for you to think more deeply about the “why” of your organization and the product or service you’re selling—to tap the emotions of the prospect.

Here are a couple of critical steps you should take so you can reposition your message in order to tap the golden “why” button.

1. Profile your customers. Most profiles are a treasure-trove of demographic, purchase behavior, interests and other fascinating data points. Profiles can be created for you by several data companies and it’s affordable to do. But the profile itself is merely the starting point. We’ve used the insights that a profile yields many times to successfully reposition messaging copy and increase response.

2. Interpret the data. Looking at reports and charts you’ll get from a profile isn’t enough. You must interpret the data. You have to think deeply about what this reveals about your customers. One example of how this works is for an insurance offer we created. The insight from the profile was that the buyer was usually a woman and she had an interest in her grandchildren and devotional reading. The approach to selling this product was the usual features and benefits of having life insurance. But we repositioned the message to reveal the “why.” The “why” message transformed the prospect into realizing that the proceeds from a life insurance policy could be a wonderful legacy left for her grandchildren or a favorite charity. The result for the marketer was a double-digit response increase.

So what can you do to improve your results? Here are some action items:

  • Profile your buyers to better understand the “what”
  • Interpret the data and align it with the “how”
  • Transform your message and reveal the “why”

Then test it.

(As an aside, if you plan to attend the DMA Conference next week in Chicago, I’d enjoy the opportunity to meet with readers. You can email me using the link to the left, or just show up at the Target Marketing booth #633 Monday afternoon between 2:00 and 3:00 p.m. Or feel free to introduce yourself if you see me at any time).