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Americans Perplexed on Health Insurance

In the midst of a crowded Democratic primary field, one of the most complex and contentious issues at play is the candidates’ positions on the future of American healthcare, and a new study by insuranceQuotes shows that public sentiment is divided and slightly perplexed.

According to this year’s annual State of Healthcare and Politics report, which was conducted via telephone in September, 62% of Americans “most strongly support” a U.S. healthcare system that includes both public and private insurance, while 25% favor a Medicare for All system that ends private insurance altogether, and just 9% favor a system that includes only private insurance.

These figures come on the heels of the Oct. 15 Democratic primary debate, where Sens. Elizabeth Warren and Bernie Sanders continued to pitch and defend their plans for universal Medicare — and the eventual elimination of private health insurance — while other candidates made more nuanced appeals to the notion of combining public and private health insurance options for Americans.

The insuranceQuotes study findings resemble those in other polls, where support for Medicare for All seems to be waning. For instance, a recent survey conducted by the Kaiser Family Foundation found that 51% of Americans back Warren’s and Sanders’ Medicare for All proposals, which is down five percentage points since their last survey in April.

The insuranceQuotes survey, which tracked responses from 1,009 people, generated these additional takeaways on Americans’ outlook on healthcare-related issues.

  • 58% believe that undocumented immigrants should have access to insurance, while 39% believe they should not.
  • 50% of Americans say that, since President Trump took office, the U.S. healthcare system has stayed about the same in quality, while 28% say worse and 18% say better.
  • 43% assert that Medicare is at risk of going bankrupt in the future, while 43% assert that it is not.
  • 34% are unaware that Obamacare is still in effect.

The future of U.S. healthcare will undoubtably feature prominently in the 2020 presidential election, so what do these figures tell us about the pulse of American sentiment regarding key health insurance matters?

See also: Health Insurance for Self-Employed People  

Public, private or healthcare combo?

In the days following the October Democratic primary debate, a great deal of time and energy was spent parsing the potential viability — and messaging strength — of both Sanders’ and Warren’s plans to eliminate private health insurance in lieu of a Medicare for All nationwide insurance plan. And while the insuranceQuotes survey shows 25% of respondents support this approach, according to Dr. Tarek Hassanein, professor of medicine at University of California San Diego’s School of Medicine, the survey data supports the broader perspective Americans have about wanting a more incremental approach to health insurance reform.

“We cannot go from private insurance to totally government-based insurance, knowing our attitudes toward government-run activities,” Hassanein says. “The idea that we will have both available makes a lot of sense, and it keeps public insurance competing with private.”

What’s more, Hassanein believes that there are age demographic differences at play in assessing this particular point, and that voters understand the competitive value in allowing both private and public health insurance to coexist.

“If you have young people voting, they will vote on public, not private. The older people who really need care will go with the private insurance — or a mixture,” Hassanein says. “They are really seeking the services. The combination lets them choose according to their needs and financial abilities. I think competition is the future — you need the public and the private at the same time so you can control the expense. The private will never increase their rates if the public is giving a good service with public rates.”

But according to Harvard health economist and epidemiologist Eric Feigl-Ding, it’s difficult to extrapolate too much from polling data about this issue because Americans are generally underinformed when it comes to the complex nuances of something like Medicare.

“If you talk to someone under the age of 60, I guarantee you they know almost nothing about Medicare. It’s incredibly complicated and comprehensive,” Feigl-Ding says. “And I don’t blame them. You have 12 [Democratic primary candidates] up on stage, and they don’t have time to go into detail. And they don’t want to lose people so they keep things as generic and vague as possible. But that doesn’t actually educate the public in a meaningful way.”

As a result, Feigl-Ding says that polling Americans about their feelings toward Medicare for All is like asking, “Do you want to live on Mars?”

“The average person doesn’t know anything about Mars and its air pressure, its average temperatures or the magnetic shielding that makes it impossible to grow crops on the surface,” Feigl-Ding says. “And Medicare is like Mars to anyone under the age of 60. People just don’t know about the complexities.”

Nonetheless, Feigl-Ding says the insuranceQuotes study reveals two interesting things about public sentiment. First, that people want incremental change. Second, that they really don’t trust the private health insurance sector.

“When you have 62% saying they favor a combination of private insurance and Medicare for All, that shows how people don’t want to move the needle too much. They want to move it a little but also stay with what’s familiar,” Feigl-Ding says. “The fact that only 9% said they’d favor a completely private system tells me that people have had really bad experiences with for-profit health insurance companies. They simply don’t trust them.”

Health insurance for undocumented immigrants

Feigl-Ding says the fact that 58% of Americans believe that undocumented immigrants should have access to health insurance reflects a growing understanding that a healthy American immigrant population is always going to be better for the country at large.

“Putting aside the human rights issues here, this is all about productivity,” Feigl-Ding says. “People get sick regardless of their immigration status. And there are a lot of jobs being held by undocumented workers in this country. Do we really want them getting sick and going to the ER or not having the means to vaccinate themselves or their children? In this instance, I think an ounce of prevention is worth a pound of cure, and people should support health insurance for these immigrants. It’s better for the country on the whole.”

For Hassanein, this issue hits close to home. Earlier this month he hosted a free health event in Chula Vista, a border town south of San Diego, allowing immigrants—documented or not—to receive free health scans and interact with insurance experts to understand the system. He says that “the system has to deal with their health issues, no matter what their status.

“The bottom line is that they need to have [health insurance],” Hassanein says. “They need vaccinations so they don’t get infected and infect other people. Pregnant people need to get the care they need. There are consequences if you deny them. Everyone needs basic insurance.”

Current state of Medicare and the Affordable Care Act

The fact that 43% assert that Medicare is “at risk of going bankrupt” also comes down to faulty information, according to Feigl-Ding.

“Healthcare costs are skyrocketing out of control, yes, but Medicare can’t go bankrupt,” Feigl-Ding says. “Medicare is a non-discretionary budget item, which means the U.S. government has to fund it, and it can issue as much debt as it needs to. Could the U.S. theoretically default on its debt? Sure, but it never has, and I don’t think there’s a risk of that happening any time soon.”

See also: Social Determinants of Workforce Health

When it comes to the state of healthcare more generally — and the Affordable Care Act more specifically — this is where experts are a little more concerned.

Feigl-Ding says the fact that 34% are unaware that the Affordable Care Act (aka Obamacare) is still in effect is partly because “the Trump administration has done everything it can to kick as many legs out from under the Affordable Care Act as possible. For instance, they don’t advertise for open enrollment anymore. And they eliminated the tax penalty for not having health insurance, so while there’s still a law saying you need health insurance there’s no penalty for not having it.

“As a result, you don’t have the risk pool of young, healthy people participating, which means premiums and deductibles are increasing while choices are decreasing. So I think this study reflects people’s frustration, but I’m not sure enough people actually know the source of why this is happening.”

Similarly, Hassanein blames people’s confusion about the Affordable Care Act (ACA) on the divisive political rhetoric that’s been injected into this conversation over the past three years.

“First, let’s not call it Obamacare. It’s called the Affordable Care Act. People think these two are different things, I’m sure of that,” Hassanein says. “The public thinks Obamacare was canceled. It’s just political rhetoric. There is very little truth being told. The ACA is still in place! But the government is saying we will not fund it anymore, so insurance companies are trying to save as much money as possible and thus are trying to pay for as little as possible. The rhetoric is helping the insurance companies. This affects the lives of all the people. And it’s a shame.”

You can find the article originally published on insuranceQuotes.com.

2 Problems Present a Big Opportunity

The continued decline of standalone long-term care policies seems inevitable, and the life insurance gap among Americans continues to widen. Hybrid policies offer a joint solution that with the right approach can turn these two challenges into a new market.

Recent months have seen a steady drip of bad news from life insurers, as firms have had to boost their reserves to the tune of billions in an expectation of soaring payouts for long-term care policies. October’s update from Unum followed Prudential’s in August, and by the time this is published more will likely have followed.

While troubling, the news simply confirms something that has been fairly obvious for some time: The old long-term care market – once so popular as a means of funding assistied living, nursing home and home care services – is now more of a headache than an opportunity.

Insurers are now having to significantly review assumptions made long ago when the first such policies were written, during a period when life expectancies were shorter and health expenses lower. To say the equation has shifted would be an understatement — healthcare costs for assisted living have almost doubled over the last 15 years, while one in two Americans now suffers from chronic illness.

The accompanying increased premiums have decimated the market. Many insurers have withdrawn from the line altogether, and those that remain are having to be increasingly restrictive with their policies.

See also: Insurtech: Mo’ Premiums, Mo’ Losses  

Axing an entire revenue stream, however — especially one that was once so lucrative — is risky in a situation where demand is clearly not the problem. The need for long-term care is going nowhere. And getting on the front foot with a new approach would be advantageous should a new solution cause an emptying marketplace to fill back up.

Hybrid policies are designed to make long-term care insurance profitable again, and they do so by simultaneously offering a new solution to another difficult problem — the decline in the life insurance market. The number of Americans holding life insurance has fallen steadily for years. The number of Americans holding life insurance has been falling steadily for decades and is now at a record low, with about half of U.S. households going without.

Hybrid policies work by combining the two types of coverage – life insurance and long-term care – and allow for payouts based on accelerated or early payments of a death benefit. Importantly, the combination also allows insurers to stabilize the risk profile of the product and provide a sustainable means of growing both the top and bottom line.

Despite some initial skepticism based on previous miscalculations that are now coming home to roost, insurers are starting to warm to the new approach, and upward of 260,000 hybrid policies were sold last year.

As well as potentially re-opening the long-term care market, the policies could simultaneously help insurers reverse the downward trend in life insurance. Evidence suggests that one of the main barriers for uptake of life insurance among today’s customers is the lack of flexibility and control associated with traditional products. By addressing this, hybrid policies promise to turn two problems into a new and untapped market for insurers.

See also: What’s Next for Life Insurance Industry?  

However, the skepticism isn’t without cause. As the headlines are reminding us, the consequences of incorrect assumptions and miscalculation can be drastic and long-lasting. If the long-term care market is to enjoy a hybrid revival and avoid the mistakes of history, carriers will need to ensure that the design is right. Given the nascent stage of the new product, this requires a specific set of underwriting skills, a granular understanding of the pricing and risk modeling involved, a deep expertise in mortality rates and new reinsurance structures to support risk transfer. For those that can get it right, though, the rewards will be significant.

3 Ways to an Easier Digital Transformation

Across industries, digital transformation and cloud migration are forces to be reckoned with. Insurance is no exception.

As an industry accustomed to operating on legacy technology, insurers should approach the cloud migration process judiciously. But they should also know that moving all workloads to the cloud – even if incrementally – is necessary to keep up with evolving customer expectations.

The industry at large is receiving this message. Nearly 70% of insurers report they are somewhere along the journey to digitally transform their infrastructure, according to a report from Ensono and Forrester.

But the jump from mainframe to cloud shouldn’t take place overnight. By taking a methodical approach and prioritizing the right workloads, insurance technology teams can achieve a hybrid IT infrastructure that allows for improved operations at manageable costs. Here are three guidelines to follow as your insurance organization adopts a hybrid cloud strategy:

Prioritize which applications to move first

46% of insurers surveyed in the Ensono/Forrester study cited improving application performance as the most important IT change their company could make to augment customer engagement. But according to IBM, nine out of 10 of the world’s largest insurance companies still run on mainframes. Leaning on legacy technology alone makes it challenging to keep pace with application upgrades and customer expectations for speed and experience. Organizations that remain within a stand-alone legacy environment will have to rely on workarounds to keep upgrading their app performance, and these workarounds will only become more frequent and costly.

See also: Digital Transformation: How the CEO Thinks

However, moving all operations to the cloud and scaling up overnight isn’t a realistic ask of traditional insurers, either. The transition is expensive and takes months of planning and testing. Instead, insurance organizations should take things slower by prioritizing the applications that require the highest levels of performance as well as most external and third-party connectivity. The basic rule of thumb: Apps that are customer-facing should be at the top of your list.

Set yourself up with premium analytics

Quality data is central to understanding the needs of agents and customers, but legacy technology doesn’t allow for the best insights. Turning to a cloud or hybrid strategy increases an insurer’s ability to access top-notch, real-time data and analytics, as well as expand into emerging cloud offerings.

According to Ensono and Forrester, almost half of insurance decision makers use cloud platforms for advanced data analytics, and about 40% believe it’s important to expand their use of emerging cloud technologies like mobile or internet of things (IoT) and increase reliance on public cloud platforms for systems of engagement. Those systems of engagement need to connect seamless to systems of record.

Find the right partners

Data analytics clearly play a huge role in the benefits insurers can reap from a hybrid cloud strategy. But a full 100% of insurers admitted to facing data-related security issues, according to Ensono’s study. Whether this is due to outdated IT infrastructure or a lack of expertise, it’s unacceptable to put any data at risk, especially customer data.

The right partners can help keep your organization’s data secure while optimizing the right applications for cloud. Mainframes – a true foundation of the insurance business – aren’t going away in this process, but they won’t bear the whole burden any more, either. Legacy systems do have their perks, such as security and expense, but ultimately insurers need to ensure they have access to the expertise needed to help their businesses thrive in the cloud.

See also: 4 Rules for Digital Transformation

The transition to a hybrid IT environment requires re-engineered IT infrastructure, the use of real-time data and insights and the right talent – the kind that can create a flexible and competent IT strategy with a custom balance of legacy platforms and cloud environment. Partners like managed service providers (MSPs), migration services and consultants can make the process much smoother. Accessing third-party support also allows your organization to skip the stressful experience of hiring for internal tech experts in a talent economy suffering from an IT skills gap.

The push from customers for faster, better service in insurance continues. But dated infrastructure and an IT talent shortage is holding the insurance industry back. Digital transformation is the only way to achieve growing expectations, cloud migration being the core driver behind the progress. Insurers must thoughtfully design an infrastructure migration plan associated with their application strategy and seek the needed resources to help carry it out, thus ensuring a stabler as well as growing customer-backed future.

How Life Insurance Agents Can Be Ready

It should come as no surprise that consumers prefer to shop online — for just about everything and anything. Not because they want to but because they have to. Information overload dictates that busy consumers take every opportunity to save every second possible. It’s almost an imperative for young, hard-working, multitasking families.

See also: How Technology Breaks Down Silos  

So perhaps we should have expected McKinsey & Company to report that, soon, “Leading digital carriers will go further by digitally enabling their sales forces, interacting with consumers and intermediaries in real-time omnichannel environments and offering remote and robo-advice at any hour on any platform.” (See McKinsey & Co., Harnessing the Power of Digital in Life Insurance.)

What does this mean?

We are being warned by the oracle of consulting firms that life insurance consumers want to interact by computer, so insurers should immediately respond by offering them remote, real-time, always-on “robo-advice.” Where does that leave the seasoned insurance professional? Will the agent finally be replaced by the algorithm? If you think this is science fiction, think again. This technology is already here.

According to a recent industry study, 88% of consumers of all ages already research life insurance online before they buy (see LIMRA, 2016 Insurance Barometer Study). Of those who buy insurance online or offline, 17% purchase directly from an insurance company after researching online, and a further 22% research and complete the purchase entirely online. In other words, of the 88% who research online, 44% of these consumers are currently bypassing any meaningful back-and-forth planning process with experienced life insurance advisers. In support of these statistics, venture capital-backed insurtech investments rose from $800 million in 2014 to $2.6 billion in 2015 — and that number continues to climb (see KPMG, Pulse of Fintech).

See also: This Is Not Your Father’s Life Insurance  

The fact that consumers are busy and markets are adapting should in no way imply that the result is better for either the consumer or the insurance agent.

Hybrid sites such as Lifester.com may offer the best of both worlds.

Like other online sites, Lifester is available to consumers 24/7. But Lifester doesn’t sell insurance. Rather, Lifester instantly connects consumers and agents so that life insurance strategies and recommendations can be formulated and developed as digital “projects.” Consumers can then invite family, friends and personal advisers into their projects to contribute comments leading to important feedback and better decision-making.

As the pendulum swings from multiple-meeting-based selling to online fast quotes, services like Lifester may provide the most sensible approach. Consumers get free expert advice from licensed life insurance professionals and are even encouraged to seek the counsel of other decision-making advocates. All project members can review information, post comments and communicate using their computers — at any time of day or night, when it is most convenient. Perhaps the life insurance sales process is ready for yet another change — one that taps into the expertise of the agent yet empowers the consumer.

Autonomous Car Tech Reaches Mid-Market

As part of the 2016 edition of the Usage Based Insurance study, we analyzed the impact of autonomy on the insurance market. We forecast that 380 million semi-, highly or fully autonomous vehicles will be on the road by 2030.

This might sound like a lot, but then at the Consumer Electronics Show in Las Vegas we heard that new manufacturers are entering the race. Typically, we expect the luxury brands to foster the development of autonomous vehicles (AVs), with Mercedes, BMW and Tesla all topping the list of development activity. This time, however, it is the mid-market brands such as Nissan, Ford and GM that are making the announcements.

All three arrived at the show with news and partnerships up their sleeves as the competition grows ever more intense.

  • Nissan, in partnership with Renault, announced 10 vehicle models with autonomous capabilities on the road by 2020, with single-lane control from this year and rolling out multi-lane control intersections assistance from 2018 onward.
  • GM announced a $500 million investment in Uber rival Lyft, which GM says could lead to the development of a fleet of driverless cars, some available for hire, as well as a network of car rental stations. This announcement follows news regarding the development of GM’s self-driving version of the hybrid Chevrolet Volt.
  • Ford revealed an agreement with Amazon, aimed at linking cars with connected homes and the Internet of Things. Ford was also expected to announce a tie-up with Google, but that did not happen, possibly because of recent regulatory proposals limiting driverless vehicle testing in California. Instead, the car maker stated that it would triple the size of its Fusion Hybrid autonomous research fleet this year to 30. Ford will also integrate new solid-state lidar sensors that create real-time 3D models of the surrounding environment.

Although many autonomous functions, such as cruise and parking, are aimed at improving comfort, most of the development today is focused on safety and crash avoidance.

These capabilities will have a direct impact on the insurance industry a lot sooner than the driverless car. We analyzed and quantified that impact in the study to precisely estimate the share of accidents that could be avoided with the introduction of advanced driver assistance systems (ADAS).

For example, we concluded that frontal collision avoidance and cruise systems could reduce losses by as much as 50% (depending on the level of sophistication).

ADAS functions could therefore lead to a reduction in accidents of between 30% and 40%, with AVs beginning to have a significant impact in mature markets from 2023 onward. In the most advanced countries, such as Germany, premiums will decrease by as much as 40% between 2020 and 2030.

With the end of the statistical actuarial model also approaching, insurers will need to be acutely aware of the car technology evolution speed. The car without accident will be on the road long before the car without driver.

The 2016 edition of the UBI Global Study was launched last month; It covers the impact of ADAS on insurance premiums in details and with a market forecast up to 2030. You can download the free abstract here.