by Chad Hogan
For millions of Americans, shopping online for health insurance has leapt from market idea just a few years ago to consumer expectation today. It’s a blessing and a curse for all of us in the individual insurance and employee benefits business. But one thing is clear — to compete and thrive in an era of health care reform, carriers, brokerages, agents and providers will need enterprise-level big data technology to drive online quoting and enrollment.
More than ever, individuals, families, and employers are demanding easy ways to shop for and compare health insurance plans online and get immediate quotes. Much of this recent surge has been driven by the Affordable Care Act (ACA) and the proliferation and promotion of government-run health insurance exchanges.
During the past year, alone, an estimated eight million individuals selected a health insurance plan through state-based and federally facilitated exchanges, according to Dept. of Health and Human Services. Millions more purchased coverage through private exchanges and online insurance marketplaces. Experts predict that these numbers will continue to climb sharply in the coming years.
Enabling online insurance plan shopping is a market necessity, but doing so is much easier said than done. The technology requirements and investment needed to operate and sustain an effective system on a regional or national basis are complex and immense. But, in the new world of healthcare, it’s vital for insurance providers to carve out their piece of this growing online marketplace.
The most significant hurdle may be to address the database technology and infrastructure, which is the cornerstone of any effective online system. But there is a cure, and it rests with big data platform and software solutions at the enterprise level.
What Exactly Is Big Data?
Plainly stated, the term, “big data” describes massive amounts of information that can be captured, curated, stored, searched, shared, transferred, analyzed, and visualized. It’s difficult or nearly impossible to process the sheer volume of complex data with commonly used software tools. Instead, specialized software systems are needed — ones that often require tens, hundreds, or even thousands of servers to operate.
Big data isn’t new to many industries. Retail, banking, entertainment, and other sectors have embraced it for years to identify trends, optimize product and service offerings, create and customize promotional offers, establish online purchasing platforms, enable real-time electronic transactions, and much more.
Our health care industry is a relative newcomer. But the revolutionary shift is finally in overdrive thanks, in part, to significant advances in technical capabilities to gather, curate, and aggregate complex data from multiple sources, as well as ACA-led streamlining of information technology standards and protocols.
One of the first major industry pushes began in 2009 with the Health Information Technology for Economic and Clinical Health (HITECH) Act incentive program. It set up $40 billion in incentive payments to drive adoption of electronic medical records. This impetus has quickened big data integration on the clinical side ever since, like seeing what treatments are most effective for particular conditions across specific groups of people.
This technology momentum continues in earnest with health care reform serving as a major propellant. Carriers now have two markets to serve with data — one online and the other off. With this comes a push for increased transparency in covered benefits, the introduction of multiple in-network tiers, and more complex benefit structures. All of this comes together to create ever more data points to manage, thereby boosting the need for big data and the ability to analyze large amounts of plan information.
These and other factors are game changers for all of us in the industry — carriers, brokers, general agents and online providers. And the potential financial value is exponential. Management consulting firm McKinsey & Company estimates that big data will generate some $300 billion in annual financial value to the U.S. health care market over the next several years.
The good news is that health care stakeholders can tap this value and access what McKinsey & Company calls “promising new threads of knowledge that make up the ingredients forming big data.” Big data allows insurance providers to build their business through online and cloud-based channels. Enterprise-level technology harnesses the power of big data, creating online insurance quotation and enrollment solutions that work in today’s changed health care setting.
For online health insurance plan shopping, a high-volume information pipeline fuels online decision support tools, consumer driven shopping platforms and seamless enrollment. Effective use of big data is becoming a key way for health insurance companies to outperform their peers. With consumers primed to expect instant insurance quotes and health plan comparisons at their fingertips, big data platforms provide the requisite doorways for success.
The DaaS Solution for Big Data Needs
But how do you create and maintain complex big data systems cost effectively? One of the best answers for mid- and large-sized organizations that market and sell health insurance is to use enterprise-level technology via a Data-as-a-Service (DaaS) model. With DaaS, data is centrally hosted and licensed on a usage basis. It is sometimes referred to as “data-on-demand,” and is typically accessed by users through cloud-based systems.
Here are a few reasons why DaaS makes sense for many organizations. First and foremost, building a national database of health plan pricing and benefits from scratch does not make sense and is simply out of reach for most organizations. It can often take more than a year to create a customized technology solution, not to mention the costs of implementing, supporting and continually updating the system.
With DaaS, instead of purchasing and implementing an expensive software solution, companies outsource their needs to an experienced provider. DaaS providers host applications on their servers, and process enrollments quickly. They also offer big data connectivity to insurance carrier databases and, in the most selective cases, even to the federal and state marketplaces.
A cloud-based DaaS insurance solution from the right partner can be a powerful, scalable, and cost efficient option for carriers, brokers and others. A group with the technological expertise and insurance company relationships (and application volume) can provide immediate access to the widest range of up-to-date rates and multi-carrier benefit information. Solutions can be plugged in quickly, offering flexibility and speed to market. And they can provide seamless integration for optimal user experience.
To Buy or Build?
There’s no getting around the fact that online health insurance shopping and enrollment is today’s reality and that big data is an integral part of this future. But does it make sense to build your own system? In the vast majority of cases, the simple answer is no. The typical technology outlay for an independent database-driven insurance quoting system is around $300,000. But the cost of sustaining an independent system goes up even further when you factor in IT maintenance and licenses to purchase and update applications. The costs will continue to gobble up company dollars and staff resources for as long as the system is in place. But those costs are relatively small compared to the cost of maintaining a database of up-to-date and compliant health plan information. A dedicated staff must update plan data regularly and manage ongoing carrier relationships to ensure a high level of accuracy. Managing this data on a national basis can cost upwards of several million dollars per year.
Cloud-based DaaS solutions are attractive because they leverage big data systems through a single, manageable cost for a variety of services that can scale up or down as needed. More importantly, these services are fully supported and updated consistently to meet the requirements of our highly regulated health care insurance industry.
There are other major benefits to buying or renting a platform versus building one. The best models offer an integrated online enrollment solution that allows agents to maintain consistent and tailored branding while quickly converting inquiries into sales. For carriers, DaaS offers versatility, as well as immediate market deployment capabilities. It also offers controlled total cost of ownership that a custom-built, internally operated and maintained option can rarely, if ever, match.
The Next Frontier Is Here
The rise of big data is a tipping point for the next frontier of clinical care, operations, marketing, customer relationship management, and service in the health care industry. For online shopping and enrollment solutions, it is the force empowering the new business processes that are needed to address today’s changing health care environment.
DaaS models offer a smart response to this transitioning marketplace. They play a central role in offering a big data solution that enables health insurance and employee benefits stakeholders to meet customers’ online demands and service expectations now and in the future.
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Chad Hogan is senior vice president of Quotit Corporation, a leading Internet application service provider for the health insurance and employee benefits industry. Quotit connects insurance companies, brokers and retail consumers with insurance rates and benefits online, in real time through more than 300 insurance carriers representing over 40,000 plan designs. For additional information, please visit enterprise.quotit.com.