‘Perfect Multicultural Storm’ for Health Insurers & ACA Exchanges

The healthcare industry is entering a confluence point where Multicultural segments represent the largest segments of eligibles and ‘Invincibles’ yet only few health insurers and marketplaces have built successful multicultural engagement-acquisition methods. Effectively tapping this opportunity is a requirement for boosting growth and reducing costs. Health Net, Aetna, Cigna and Humana “weathered the storm” excelling in acquiring new exchange eligible Multicultural consumers while UnitedHealth grabbed significantly less than their fair share of Hispanic growth. Florida attained the leading Hispanic enrollment rate among large Hispanic states. On the eve of the third open enrollment period, it is clear that insurers who can effectively figure out the nuances of educating, influencing, signing up and serving multicultural customers are poised to accelerate their growth and win significant share.

“We are at a ‘perfect storm’ in Affordable Care Act (ACA) growth among Hispanics and African Americans,” said Carlos Santiago, President of Santiago Solutions Group, a business strategy & research consultancy. “We are entering a confluence point where Multicultural segments represent the largest segments of eligibles and ‘Invincibles’ across the most populous states yet only a few health insurers, and marketplaces, have built successful multicultural engagement-acquisition methods. Effectively tapping this opportunity is a requirement for boosting growth and reducing costs.”

Despite all the additional resources in navigators that were deployed in the last open enrollment, and that Hispanic-dedicated media allocation has quadrupled (from 3.1% in 2010 to 13.9% in 2014) by major health insurers, a new analysis by ethnicity performed by Santiago Solutions Group (SSG) revealed that the Hispanic enrollment rate still trailed far behind that of any other group even in the best performing states. Based on cumulative enrollment in exchange ACA plans figures at the end of the second Open Enrollment in 38 states, SSG’s analysis revealed that the Hispanic segment is trending 37 percent below where it should be in sign-ups given its proportion of exchange eligibles –net of undocumented in FPL 139-400. Similarly, the African American segment enrollment is 16 below where it should be.

Some health insurance brands “weathered the storm” and excelled in acquiring new exchange eligible consumers and others appeared to be “treading water” and falling behind. Perfect Storm_smaller picAccording to data extracted from GfK MRI’s Survey of the American Consumer®, a nationally representative annual survey mined by SSG, the health insurers that excelled in taking more than their fair share of Hispanic growth among FPL 139-400 between 2013 and 2015 were: Health Net, Aetna, Cigna and Humana. At the other extreme, UnitedHealth grabbed significantly less than their fair share of Hispanic growth against other major health insurers.

Among major players achieving double digit growth rates in their overall base among FPL 139-400 since 2013, it is evident that some built multicultural engines much better than others. Aetna, Cigna, Health Net and Kaiser Permanente proportionally gained the most traction from Hispanic consumers. Aetna relied the most on African American consumers while UnitedHealth Group generated the largest shares of growth from White Non-Hispanic consumers.

Similarly, some large Hispanic states performed stronger at signing up eligibles than others including several Federal-Facilitated Marketplaces (FMM) states that outperformed state-run exchanges. SSG’s analyses uncovered that the infamous Covered California had only acquired one third of the vast state’s exchange eligible Latinos. On the other coast, Florida attained the leading Hispanic enrollment rate among large Hispanic states, having already successfully recruited half of its exchange eligible Hispanics. Most importantly, the study pointed out that half of the remaining exchange eligibles in the 38 states analyzed are Multicultural eligibles, and one in three of the overall remaining eligibles (net of undocumented) are Hispanic.

It is useful to understand why this ACA ‘perfect storm’ is at a critical crossroads as major competitors race towards gaining growth momentum and creating loyalties. In the short-term, we see that there will be more pressure placed on creating effective multicultural engagement. But most important are the longer-term innovation strategies that must emerge to successfully design truly affordable plans and networks that may reduce cost, while meeting the specific access and care needs of Hispanics and African American consumers. Additionally, the customer experience of these newly insured will need to inform and engage as never before since these newest consumers will have the lowest health literacy, the youngest median age, and the most collaborative hyper-connected lifestyle of any group. In this ‘storm,’ it’s too late for blanket ‘general market’ strategies. The insurers and states most adept at multicultural segmentation will be those who emerge strongest after the storm.

On the eve of the third open enrollment period, it is clear that Health insurers who can effectively figure out the nuances of educating, influencing, signing up and serving multicultural customers are poised to accelerate their growth and win significant share. Additionally, understanding the rare confluence of circumstances and conditions which created this “perfect storm” in Open Enrollment 1 & 2 may differentiate between those Health insurers who will bring more eligibles into their folds during Open Enrollment 3 and those who will “sink” despite their best efforts.

JoinSSG at DTCAbout SSG: SSG guides clients to identify the highest ROI opportunities, simplify business decision-making through advanced analytics & insights, and craft effective marketing strategies that advance sustainable total growth fueled by Millennial, Multicultural & Hispanic segments.

Sources: SSG analysis of the Department of Health and Human Services reported enrollment in Federal Facilitated States from Nov 15, 2014 until Feb 22, 2015 special enrollment extension, the Family Kaiser Foundation, Estimated Number of Potential 2015 Marketplace Enrollees, applying eligibility by income and household size, by race, and geography from the US Census and Nielsen-Scarborough USA+ 2013 R1. For SSG’s enrollment rate analysis, the 38 states included in the analysis represent 80 percent of the U.S. population and many of the largest multicultural states in the country such as Arizona, California, Florida, Georgia, Illinois, Nevada, New Jersey, North Carolina, Pennsylvania, Texas, and Virginia. These states have broken down the ethnicity of those newly enrolled and renewed in exchange Qualified Health Plans. Included amongst these are all the Federally-facilitated marketplaces and state-partnership and most of the state-based marketplaces with notable exceptions like New York, Connecticut & District of Columbia. For the health insurers competitive analysis SSG relied on GfK MRI American Consumer Survey Spring 2013 and 2015. For the AdSpend analysis, SSG relied on AHAA’s Hispanic Ad Spend Trends 2010-14 Report based on 2010-2014 Nielsen Monitor Plus data analyzed and interpreted by Santiago Solutions Group for AHAA: The Voice Of Hispanic Marketing.

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