In May 2013, John Sarich warned in an interview, with sobering accuracy, that builders of the Patient Protection and Affordable Care Act (PPACA) enrollment systems would probably be in big trouble during the first PPACA open enrollment period if they failed to get detailed specs to technology vendors by June 1, 2013.
In July 2014, he talked about the back-end system gaps that led to the exchange system’s chronic reporting problems, and the U.S. Department of Health and Human Services’ problems with understanding and managing the PPACA risk corridors program.
See also: IT strategist: Exchanges face more pain
Now Sarich, vice president of corporate strategy at VUE Software, an insurance industry automation company, is thinking about another health insurance industry driver: insurers’ own views on what the United States should do now that any gains from the PPACA coverage expansion provisions seemed to have flattened out.
VUE has been in Orlando, Fla., this week, at the NAILBA 34 conference, to promote a new compensation tracking system aimed at insurance distributors, including distributors of a variety of health-related supplemental products.
Sarich said he thinks the insurance distributor sector is where the action is right now, mainly because of the collision of ideas going on in the major medical market.
Sarich said he believes the health insurance community itself now has a split: between insurers that are still hoping for the current exchange-based arrangement to succeed; insurers that would like to see a return to something like the 2009 U.S. major medical market, but with higher deductibles and more flexible health savings accounts (HSAs); and insurers that want to see the major medical market for working-age Americans look much more like the Medicare supplement insurance market or the Medicare Advantage market, with the government providing universal basic coverage and private insurers competing to sell supplemental products.
Another driver, Sarich said, is that he has a hard time imagining any new type of entity bothering to take on the giants already in the health insurance market. A few big, hospital-based health care systems or insurance distributors may still try to break in, but, even if Google and Facebook dip their toe in the water here and there (Oscar), they probably have better ways to use their capital, Sarich said.
Health insurance “is a complicated business,” he said. “And this is a very low margin business. You’ve got a market that’s pretty well served by the companies that are in it right now.”
Many insurers seem to be inclined to pass as much of the insurance risk as possible on to the government or some other entity, and to operate more as distributors of other insurers’ products, Sarich said.