A new study that looks at how 4,700 consumers under the age of 65 bought insurance in 2019 provides insights into what prompted them to shop plans. The research, conducted and published by Deft Research, may help marketing, sales, and product development professionals better compete for members in 2020. Here are four findings from the market research firm’s Individual and Family Plan Shopping and Switching Study.

Consumers have more choices
Nationally, the number of carriers in the exchange market increased by 17 percent for plan year 2019, according to the study. Both the total number of carriers in individual markets, as well as the total number of unique carriers in the nation, went up. Accompanying the increase of carriers in the market, the number of options on state exchanges increased by .7.

That increased competition has contributed to a decrease in 2019 premiums for many plans across the nation. And that’s good news because…

Cost matters—a lot
Consumers were once forced to switch plans because of plan terminations. Thankfully, with more carriers in the market, individuals have more choices and are moving on for the better-priced deal, researchers found.

Indeed, cost sensitivity was the highest it’s been in the last four years, up more than 40 percent compared to 2018. Researchers also determined the “sweet spot” for premium pricing with both subsidized and non-subsidized consumers. For a 40-year-old consumer, that ideal premium range fell between $140 (subsidized) and $220 (non-subsidized)—both below standard silver pricing for all consumers except those receiving the highest subsidies.

But price sensitivity extends beyond premiums, Tim Brousseau, vice president client services, Deft Research, told RISE. Consumers may agree to pay a $600-$900 monthly premium but are finding it difficult to swallow the additional costs of high copays, high-deductibles, and maximum out-of-pocket costs. They now realize that those costs quickly add up and they could spend as much as $15,000 for health care in a year when you consider the total cost of premiums, deductibles, and out-of-pocket maximums. As a result, many younger individuals in good health have decided to hedge their bets and forego purchasing health insurance. In the event they get sick, they’ll take their chances and pay the bills, which in some cases results in a savings of thousands of dollars. 

A new competitor emerges
While it may be difficult for competitor plans to get premiums as low as $140-$220 a month while abiding by Quality Health Plan (QHP) standards, researchers said there is a growing alternative (and potential threat) to the industry—faith-based options.

Faith-based health care sharing ministries (HCSM) are priced in-line with consumer’s “sweet spot” (as low as $160 a month for the same non-subsidized 40-year-old), according to an executive summary of the research. These organizations are made up of people with shared religious or ethical beliefs who make monthly payments to cover each other’s medical costs. However, they don’t have to comply with the protections of the ACA, such as coverage for pre-existing conditions, and don’t guarantee payment of claims.

Many industry watchers worry that HCSMs may undermine the risk pool, siphoning healthy individuals from the broader insurance market, leaving ACA-compliant health plans with sicker members and higher costs.

Prior to 2010 there were 200,000 members of these organizations, according to the Commonwealth Fund.  Nearly one million Americans now belong to HCSMs in 29 states, the Alliance of Health Care Sharing Ministries reports.

A shrinking market
In addition to the competitor threat, product managers must face a new reality: The market that they are fighting for is shrinking, says Brousseau. The total number of insured ACA members is down another 3 percent in 2019.  The negative impact of a smaller slice of pie is more painful because the pie itself is getting smaller, he says.

About the research
The Individual and Family Plan Shopping and Switching Study is the first study in Deft Research’s four-part Commercial Market Insights Service for 2019. Upcoming reports will provide insights into group business decision-makers, employee choice and preference, and the individual and family plan member experience and engagement. Deft has also recently published information about trends in Medicare shopping and switching during this year’s Annual Election Period. To learn more about those findings, click here.