The 5 innovation questions CMS wants exchange insurers to ask themselves

Health insurers need to see the changing healthcare market as an opportunity to innovate like some car companies have done in their industry, CMS Acting Administrator Andy Slavitt said at an Oct. 5 forum of marketplace insurers.

Dealing with a steady stream of negative news about the Affordable Care Act exchanges—from unfunded risk adjustment programs to rising premiums to large insurers departing—Slavitt tried to paint a sunnier picture by talking about how other industries have been able to adapt to big, disruptive reforms.

To make his point, he compared healthcare to the auto industry.

“The luxury brand that grew in 2015 was actually an American company—Tesla, which grew by more than 50 percent, and moved to No. 1 in market share,” Slavitt said. “How? They brought a new vision of environmental consciousness to the luxury market. In fact, for those who thought the auto industry was doomed, we have seen that companies have come along and reinvented it, 2015 was U.S. manufacturers’ best year of sales ever.”

While admitting the disruption caused by regulatory changes and new technologies isn’t easy to deal with, Slavitt argued the private sector is up to the task.

“If critics want to pretend it happens automatically, just looking at other industries tells you that it doesn’t. If critics think we should abandon consumers and go back to the old way because it’s not all figured out just yet—the same way some that many predicted the demise of the auto industry—that misses the fundamental premise of 1) how progress is actually made in our country, and 2) your ability to innovate,” Slavitt said.

Slavitt did then get into more healthcare-related topics. The premium increases, he said, are still below original projections, and many plans had been “underpriced” in the first years of the exchanges.

“Nobody knew what it would cost to cover sick people. We’re still learning that,” he said.

He admitted he’d prefer it premiums were increasing more gradually than the 18 percent average for 2017, and also said there’s still room for Congress and the next president to improve the ACA, but his overall message was to reject the “doom and gloom predictions” for the exchanges.

Slavitt suggested insurers ask themselves five questions when it comes to their strategies to succeed on the exchange:

1. What’s your vision and cultural reference point for serving this population?
2. How well do you know your customer?
3. Can you build a relationship with consumers around things they need and value?
4. Have you created a product that meets the needs of your customers both for service and affordability—not a commercial product, not a Medicaid product—but a Marketplace product?
5. When you find what works how do you replicate it into a growth strategy?

The companies which are succeeding, Slavitt said, have been changing their approach in this new marketplace, or as he put it, “they see how to replace underwriting with care management.”

He didn’t touch on several of the changes HHS and CMS have already announced in order to shore up confidence in the exchanges, like stepping up marketing efforts aimed at younger, healthier enrollees to improve the risk pool. Those changes haven’t silenced some health policy experts who predict the “death spiral” of the post-ACA health insurance has begun.