Price Is Still No. 1 Factor in Buying Healthcare Insurance
While the cost of healthcare insurance continues to be the major purchasing-decision factor, increasingly the type of insurance is playing a critical role in the ultimate purchase.
This trend was surfaced in Information Strategies, Inc.’s annual survey of individual healthcare-insurance buyers.
Whatever plan is chosen, most respondents ranked price, plan type and deduction limits as the three key components of the decision-making process.
In comparing this year’s poll to two similar soundings made in the prior 30 months, respondents ranked insurance type as the second most important overall decision factor, with deductible limits a close third. [SEE THE GRAPH]
Part of the reason may be the increased presence of health savings accounts, or HSAs, which soared this year to cover 9.1% of the respondents compared with just 3.9% in 2009 and 2.3% in 2008.
“What this means, said JoAnn Laing, Chairperson of Information Strategies, Inc., “is that policy type is increasing as a key decision factor. Coupled with the rise of deductible limits, this clearly shows that the growth in awareness of health savings accounts (HSAs) is entering into the decision matrix. People now recognize that there are alternatives to more-traditional healthcare insurance plans.”
With 731 responses across the U.S., buttressed by focus groups responses, the survey highlights a growing sophistication in the purchasing of healthcare insurance by consumers. [SEE THE GRAPH]
Other key findings of the survey were:
• The Internet is now used by one in four purchasers at some point in the process. [SEE THE GRAPH]
• Agents are losing ground as influencers in the purchasing process.
• Friends and family recommendations aren't as important as in the past.
• Respondents didn't expect healthcare-reform legislation to reduce their costs.
Among the interesting details of the survey was that individual insurance purchasers were consistent in their responses whether purchasing insurance for themselves, as a couple or for a family. The respondents were roughly divided into thirds among individuals, couples and families (one or more children). Two percent were families with one parent and a child.
Also consistent over the three studies is the fact that a majority (53%) had the same insurance company for three or more years.
Of the HSA respondents, 29% had the policy one year or less, the highest total since the surveys began in 2006.
The survey also highlighted the differences and similarities between purchasers of more-traditional PPO and HMO plans and buyers of HSA-qualified high-deductible offerings. [SEE THE GRAPH]
Clearly, HSA-qualified offerings are more popular with purchasers between 25 and 55 years of age and with incomes between $35,000 and $95,000 per year. More-traditional plans are more popular on the lower end of the economic scale and among people with incomes of more than $105,000 a year. [SEE THE GRAPH]
And clearly as well, the tax benefits are popular with middle-income purchasers, a finding backed up with focus-group and telephone research.
Purchase influencers are changing however. Unlike respondents in prior surveys, only four in 10 listed the input of family and friends, and of those, a bare majority said such input was important to them. These numbers have decreased over the past three years.
Overall, when asked if they would recommend their current insurance plan to family and friends, three of four respondents said they would. However, when broken down by insurance type purchased, eight of 10 (80%) of HSA-qualified users said they would urge others to purchase, while only two in three of traditional-plan users (PPO, HMO) would do so.
Agents' Influence Declines
The survey also surfaced a marked decline in the importance of agent recommendations in the purchasing process. Here, too, the influence of the agent was viewed as important or somewhat important by just 53% of those who responded. Further, when analyzed, over a three-year period, a majority had shifted from "very important" to "important" or "somewhat important" in rating agent input.
The survey found a marked increase in agents' quoting HSA-qualified insurance plans on their own without being asked or more readily when asked. That increase can be attributed at least in part to a rise in the agents' learning curve regarding the plans and to the agents' desire to keep the business.
While there is a three-year upward trend in the use of the Internet as a tool in the decision process, slightly more than one in five said it was a "somewhat important" or "very important" factor in the purchasing process.
Nonbuyers Hold Similar Views
Included in the survey were responses from 69 individuals who hadn't purchased healthcare insurance. Responses showed that if those in this group were to buy, their decision criteria would be strikingly similar to those of purchasers.
The poll was taken during the month preceding the final vote on healthcare reform. Three out of four respondents, both insurance purchasers and nonpurchasers, didn't think premiums would be reduced under the new law.
The same negative ratio applied when respondents were asked if they thought overall healthcare costs would decline. Individuals without healthcare insurance echoed that view almost exactly.
The survey was conducted over 45 days and totaled 731 valid responses from 38 states. It was supplemented by focus groups and follow-up telephone interviews.
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