HealthPocket: The Kayak of Health Insurance
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David Williams: This is David E. Williams, cofounder of MedPharma Partners and author of the Health Business Blog. I’m speaking today with Steve Zaleznick, Director for Consumer Strategy and Development at HealthPocket. Steve, thanks for joining me.
Steve Zaleznick: My pleasure, David.
Williams: What is the unmet need that you’re addressing with HealthPocket?
Zaleznick: The most fundamental unmet need is that when people are faced with extraordinary numbers of choices of health plans that the result does not go well. One example from a recently published article in Health Affairs indicated that only about 5% of Medicare prescription drug part D beneficiaries were in the least expensive plan.
There’s a huge opportunity to help people sort choices and make decisions that work better for them. The second largest need is that insurance distribution is expensive, and helping to reduce the cost of distributing the health insurance and getting people to the right plans will help solve some very significant needs in the marketplace.
Williams: Dealing with health insurance is very complicated. How do you actually achieve these goals?
Zaleznick: One of the concepts that we’ve been using in building our website healthpocket.com is that you shouldn’t need to have a PhD in health economics in order to make a good choice for health insurance. The fundamental premise is that we can support the site with a large amount of data, but make it much clearer to individuals and allow them to sort based on various preferences..
We’ve got quality scores in which there is a rating process looking at health plans. It also lists prices, and there’s also an analysis of out-of-pocket insurance risks and obligations. Depending on each person’s situation, it’s going to be a very individualized decision. Our process is to allow people to sort based on the criteria that matter most to them.
We’re early in our process, our website went live in beta early November. We’re going to continue to build on those principles about allowing the individual to sort according to his or her preferences.
Williams: What kind of information does an individual need to provide in order to be able to use the site effectively?
Zaleznick: The fundamental principle of our business is that the individual needs to provide as little information as they want to provide. It’s important for us that the people get information back from us without us asking for identifying information, for example, address, phone numbers, and things of that nature.
Insurance is very geographically based, so zip code is the first criterion to allow the sorting process to begin. Then if the person is looking on the Medicare side, if they’re able to enter prescription drugs that they know they’re going to be taking in the upcoming year it allows some additional sorting to take place.
On the individual side, fundamental things, like birth dates, whether they’re smoker, and gender matter for the pricing. You can get into the system by answering these questions if you’d like to. More answered questions gets more detailed pricing information.
Williams: What you’re doing sounds like it must be related in to insurance exchanges, both the public ones under the Affordable Care Act, and also private ones. Can you explain what the relationship is between HealthPocket and those other kinds of models?
Zaleznick: We’re very complementary to public exchanges. Our idea is that we’re going to show everything available, get unbiased data and allow sorting by preferences to take place within that. This will also be happening in public marketplaces for those plans that are carried by the exchanges.
Our process is to try to simplify this as much as possible, to be very consumer friendly and to offer complementary services that work effectively for people making that decision.
A private exchange can mean anything. It’s an ambiguous term. The thing that would differentiate us in every respect is the objectivity. The fact that we have taken a position not to represent or to broker any plans product.
We think of ourselves more as a high technology/media type company, where we’re going to show everything and allow the results to fall out however the consumers who are using our site want them to fall out. It’s a very open marketplace and it often yields very interesting results over a period of time.
Williams: Medicare Part D has a clear kind of user that I’m sure you have in mind. Is that in fact the target user or are there other segments that you would be addressing primarily?
Zaleznick: It is a very clear target now, and even after the open enrollment period ends, the numbers are about 10,000 people aging into Medicare on a daily basis. It is absolutely a key target to what we’re doing. We also have on our side individual health insurance, which right now is the traditional market of people who would buy health insurance on their own for themselves and their families.
We have a small business piece that is helping employers up to about 100 employees and their workers select insurance. That will continue to be an important segment. It’s the segment that also will be moving into the insurance exchange environment in 2014.
We’ll also build within the site information to help people who are eligible, to select a public benefit plan such as Medicaid, which also is an area where a lot of people are automatically assigned to a managed care plan. We believe this is an opportunity to be helpful to people in that selection process as well..
Williams: Talk a little bit about your business model.
Zaleznick: It’s straightforward to build a consumer experience that we believe is needed in the marketplace and will be appreciated by people who use the site. It is built on a promise that we can help millions of people save billions of dollars and we fundamentally believe we can do that.
The revenue model is advertising based and with the commitment that we’re making to our users to separate the revenue from any of the data or the recommendations, or the sorting technology.
As I’ve mentioned earlier, we want the recommendations to fall wherever the consumers want them to fall and the advertising will be a separate portion of what we’re doing on the website. Our fundamental goal is to create a consumer experience. Then we’re going to layer on the revenue based on the model that we’ve created.
Williams: Can you provide some tips for a user if they want to go on your site and try it out? What would you recommend somebody to do?
Zaleznick: For example on the Medicare side, you would want to know your prescription drugs and obviously your zip code. The system attempts to identify what the zip code is, but you may need to change it or enter it.
If you’re thinking about a better Medicare plan, for example a plan with prescription drugs, you would still enter your information so it would be the zip code, the drug name, and then the dosage. When you finished doing that, the pricing will come out.
You can sort two ways and then do a comparison by changing the quality, and then sort by premium or use both of those criteria. If you are reasonably healthy, then you would underweight the maximum out-of-pocket given the fact that it’s not likely you’re going to come up against it.
If you are serious user of medical services, you’ll also weigh very heavily the maximum out –of-pocket cost. It can be somewhere from $3,000 to $6700. It’s a material amount of money that you want to take into consideration.
When you go into plan details, after you have narrowed down your search to two or three choices that look most logical you’ll also want to confirm that key physicians that you want to continue to see are in network and also inspect other kinds of plan details. Lastly, you will narrow it down to one choice. What we highly recommend is that you hit the contact button and that will send you to the plan or a representative that is offering that specific plan to answer any kinds of question and to finalize the acquisition of the insurance coverage.
It’s a relatively speedy process as you had mentioned at the beginning of our discussion. The underlying coverage is complex and it’s important once you’ve done the sorting process that the policy is really what you want and something that you understand.
Williams: How do you expect the site to evolve? Certainly it sounds like you’re working on the user experience now and then intend to layer on some advertising over time. What else could we expect if we come back a year or two from now?
Zaleznick: Our ambitions are high so we expect to continue to improve the customer experience to find new and improved data, which will allow us to do that. The goal is to help people not only acquire health insurance, but to use it most wisely.
I’m sure you know, but the trend is very clear in terms of putting deductibles and other kinds of payment obligations onto consumers. The issue has been not only do you acquire the plan, but have you use it over the course of the year.
The really interesting change in health care reform is that it’s going to be taking what we’ve learned how to do with Medicare, which is a one-time annual enrollment period in which the coverage is guaranteed and move that into the individual market.
So we’re going to take everything we learn from Medicare and make it ubiquitous throughout the marketplace. The end result in looking where the data is going to take you is somewhere on the order of 50% of the American population that is going to have to make these decisions on an annual basis.
It’s important that they do this well. There’s a lot riding on the ability of people to make selections and be comfortable with their choice.
Williams: Where do you get your data and how do you keep it up to date for all the plans and all the geographies?
Zaleznick: I have the pleasure of working with some extraordinarily talented engineers and developers who know the stuff well. There are sources, some of it is from the government, some of it is from non-profits, some of it is from commercial data sources. They are out there, there’s a lot of work to free up the data. It’s very complex in terms of how you sort it and how you normalize it.
Our goal at the website is to take something that is highly complex and involves massive amounts of data and to try to translate that into a good and reasonably simple experience that the consumers will find valuable
Williams: I’ve been speaking today with Steve Zaleznick. He’s Director for Consumer Strategy and Development at HealthPocket. Steve, thanks so much.
Zaleznick: You’re welcome, David.
David E. Williams is President of the Health Business Group, strategy consultant in technology enabled health care services, pharma, biotech, and medical devices. Formerly with BCG and LEK. MBA (Harvard), BA (Wesleyan).
Williams has written the Health Business Blog every business day since 2005.