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Online Health Insurance Shoppers: Who Are They, and What Are They Buying?
Featured in Managed Care Outlook - The Insider's Business Briefing on Managed Healthcare
Volume 21, Number 22 - November 15, 2008
Regardless of how you look at it, the landscape for purchasing health insurance has changed in recent years. Employers, often faced with the inability to offer coverage to their employees (or at least spouses and children), increasingly have turned over the task of finding health insurance to their employees. For some consumers, the switch to an individual plan has had less to do with a lack of employer-sponsored coverage and more with wanting to take control of their health care coverage. Whatever the reason may be, more and more consumers are switching to individual plans, and they are doing so online.
"Costs have been rising steadily for years, for small and large businesses," explains Brandon Cruz, president of Norvax, an online health insurance technology company. "As costs go up, employers have to pass on some of these cost increases to employees. As a result, a lot of people are finding that it is actually cheaper to go out and buy their own individual plan. We also see more people wanting to take control of their health care decisions and are doing so by purchasing coverage online. We expect that to continue going into the next several years, if not permanently."
As the shift to the individual market continues to grow, many in the health care industry are taking a closer look at exactly what consumers want in a health plan and what the biggest trends are when it comes to shopping online for these policies. One company that has done so recently is Norvax, a developer of Web-based sales and customer communication tools designed to connect and help consumers, insurance brokers, agents, and carriers transact health insurance business.
In 2001, Norvax launched an online shopping site, GoHealthInsurance.com, which offers side-by-side plan comparisons from more than 70 carriers, plus live access to a network of more than 10,000 experienced agents who can assist customers in finding the insurance plan best suited for their individual needs. The Web site was used recently as a launching pad for a study of nearly a half a million online shoppers. At the heart of the analysis was the desire to find out who is shopping online for health insurance and what it is they are seeking.
"We have always felt that by helping consumers we are ultimately helping agents and brokers, and vice versa," explains Cruz. "We have hundreds of thousands of members coming through our GoHealthInsurance.com site each month, and that is where we are getting all of our information on this research."
The study analyzed data from more than 446,500 online shoppers who voluntarily requested a quote or contact from insurance agents between June and August 2008. The data was analyzed for trends in five different categories: geography, current insurance status, insurability, gender, and age.
Key Findings
Some of the research was what you would expect to find, says Cruz. For instance, there were a lot of people in their twenties, thirties, and forties who responded. According to the study, however, there is a clear gender gap in the online health insurance marketplace. Almost two-thirds of online health insurance shoppers are women, and in every region, more women than men are uninsured. (SeeFigure 1)
Only 13 percent of the women identify themselves as married, compared to nearly 30 percent of male shoppers in the study. In addition, women in their twenties and thirties are leading the trend of purchasing individual coverage online, despite the fact that women in general tend to have lower rates of coverage and are less likely to qualify for standard coverage.
When broken down by state, the top 10 states accounted for half of the online shoppers in the study. Those states include Florida, Texas, California, Pennsylvania, New York, Georgia, North Carolina, Washington, Ohio, and Massachusetts. The South accounted for more than 43 percent of the shoppers in the study. (See Figure 2) As far as age is concerned, more than 53 percent reported their age as being between 20 and 49.
One in five online shoppers is currently insured but is shopping for better options or preparing for the loss of their current plan. In addition, one out of every six online shoppers is deemed "uninsurable" for standard coverage due to either a pre-existing condition or a body mass index (BMI) of 39 or higher. (See Figure 3) There might be riders that they could make to their plans or they might be able to go into a state high-risk pool, but the bottom line is that one in six would have some level of difficulty getting standard coverage.
"We know that is a concern for people shopping for affordable coverage. This is why the role of Web sites like GoHealthInsurance.com combined with the help of a trusted advisor, like an independent broker, is so important. Consumers can find a lot of information online but may end up confused by their choices. Brokers have the experience of working with several carriers and can tell which carriers are more likely to underwrite applicants based on their health conditions. This saves the consumer valuable time and frustration because the broker can guide them to the carriers which are more likely to cover them, leading to better coverage and a more satisfying shopping experience,"says Cruz.
Norvax works with most of the managed care organizations around the country. Historically, that has included people in the under 65 market. More recently, the company has moved into a partnership with Wellpoint to also provide Medicare products on its agent platform and through GoHealthInsurance.com.
"We are definitely seeing a shift away from employer-sponsored coverage," notes Cruz. "Typically, people go to work, and their insurance is paid for. They don't think about how much it costs to go to the doctor or the hospital. They only have to pay a $20 copayment, and nothing else really matters. In my opinion, that's part of the reason health care costs are so high. The more the insurance companies get people to make their own decisions, the sooner we will be able to alleviate some of the upward pressures on health care costs in general. And our research is definitely showing that things are moving in that direction."
To view the full study, go to norvax.com/datareport.html.
