Are Hispanics and Millennials ACA procrastinators? [INSIGHT]

Don’t Blame them. They Need More.

Shopping for healthcare has become a frightening experience for 2 million exchange eligible consumers. Although enhancements were made to federal and state exchanges call centers and online platforms, the experience they offered was far from “best-in-class”.  This was especially so for Hispanic and Millennial (ages 18-34) eligibles, who are facing a range of enrollment obstacles that go beyond the now infamous Obamacare site glitches. The lack of truly culturally competent channels for segments with limited healthcare literacy, and the lack of clear explanation of benefits for eligible, have drastically impacted the proportion of Millennials and Hispanics enrolled in ACA exchanges by the deadline for 1/1/14 coverage.

Despite Hispanics’ higher uninsured incidence and higher expectations of the healthcare reform, Hispanics only make up a miniscule fraction of the growth opportunity. The slower than expected enrollment has prompted grave concerns to the healthcare industry as both Millennials and Hispanics are critical to the viability of the reform. However, SSG experience has demonstrated that balancing younger families who will utilize the system less against families with conditions prompting higher healthcare utilization costs takes much more than a traditional lifestage segmentation approach.  Effective Growth Leaders apply wellness mindset segmentation models that discern individuals with healthier outlooks who are more likely to lead healthier lifestyles, preventing the most prevalent chronic conditions in the overall population. Unfortunately, many Millennials are ‘unhealthy time bombs.’

Although the Obama administration has not released a full analysis on the estimated 2 million who enrolled in exchanges nationally, California can be considered a best case scenario indicative of what might had happened more broadly.

o     To better illustrate this gigantic enrollment gap, the Hispanic exchange eligible potential in Los Angeles, after discounting for undocumented and accounting for IFP covered and uninsured only within the 139-400 FPL, amount to a bit over 1 million or nearly half of the exchange eligible potential, according to Santiago Solutions Group (SSG) analysis.  This compares with merely 12,781 Hispanics enrolled through Covered CA in the first 8 weeks (Oct. 1-Nov. 30), or only 1.3% of Los Angeles’ estimated Hispanic exchange eligible prospects. Furthermore, actual exchange enrollments completed in Spanish language represented only 34% or 4,364 of total Hispanics enrollments as opposed to an estimated 547,804 Spanish Dominant exchange eligible opportunity in LA, signaling a deeper acquisition calamity.  That’s right, Hispanic efforts have underperformed by a long shot, achieving less than 1% of the segment exchange potential.

o     As far as Millennials (18-34) enrollments, Covered California also under-delivered to the potential. By the end of November there were only 20,390 Millennials enrolled in the exchange in the entire state of California or 24% of all subsidy-eligible enrollments, out of a potential opportunity of about 1 million in Los Angeles alone, per SSG analysis. Certainly, as in any other acquisition effort directed at Millennials in the largest states, the fact that 3 in 5 Millennials in Los Angeles are Hispanic heightens the need to address nuances while finding synergies for coordinated common solutions to both segments.

National and state ACA analysis and implications for insurers, hospitals, and providers will be refreshed and updated for SSG’s upcoming ACA webinar on 02/04. Register HERE.

Why are Millennials and Hispanics not meeting enrollment expectations thus far?

Per an on-going assessment by SSG, what seems as procrastination is actually a painstaking trade-off decision making approach yet to be reconciled by most Hispanic and Millennial exchange eligibles. In our view, final resolution will hinge on addressing four salient needs:    

1.    Value – Hispanic & Millennial eligibles perceive less value from the health exchange plans. They have higher levels of price sensitivity and as such will easily reject purchasing plans based on expenses they deem unwarranted for what they’d be receiving. While other segments may be more willing to pay more for health coverage, Hispanics and Millennials often confront other competing needs including schooling, safe neighborhoods, and yes, socializing and connectivity. In fact, SSG’s work has uncovered that Millennials place a higher value on connectivity than on healthcare coverage.  To resonate with highly price sensitive customers, marketers must understand their mindset, that is, what and how they want and expect services and where you can correct their misperceptions while increasing their perceived value. For eligible families that have tight budgets and challenging priorities, the exchange monthly coverage and deductibles may not make economic sense, thus, they will apply higher scrutiny to exchange options versus going without coverage. For instance:

o    A Millennial California family of 5 with income of $60K (200-300% FPL) was recommended Enhanced 73 through Covered CA, which has about 8 coverage options, (from HMO to PPO) starting ranging from $314 for basic coverage up to $466 monthly, $3,768 -$5,592 annually, plus copayments on visits, prescriptions and other expenses. All the plans under Enhanced 73 have an annual family deductible of $3,000, co-payments of $40-$50 and drug copayments of $20-$30.

o    In Texas, a young Millennial couple in their early 30’s making $36,000 would have healthcare access anywhere from $87 to $318 monthly, $1,044 to $3,816 annually, and other costs including annual deductibles ranging from $4,500 to $12,700, doctors co-payments of $10-$60 and drug copayments.  

o     Another viable option for these families would clearly be not to enroll. If so, and they failed to obtain an exemption, they will have to pay a penalty or “shared responsibility fee”, which would only set them back minimally, $650 and $360 respectively, or 1% of their annual income. No exchange coverage is a prudent choice in many cases.

2.    Simplicity – simple and concise communications and channels are key for low healthcare literate segments, including Hispanics and many Millennials. The ACA has floundered in conveying the message in factual, concrete ways that reassure and resonate. People with complex family situations must complete more steps to finish their applications, and current exchange systems are not equipped to handle complex processes.

3.    Trusted Validation – community outreach and education of benefits by trusted sources in the community haven’t trickled down yet to Hispanics or Millennials. There is discomfort and distrust among Hispanics because of the negative experiences they have gone through or heard from family & friends. They will likely continue to wait longer to enroll until they hear first-hand validation of positive experiences from those newly enrolled. The challenge is that there aren’t enough exchange pioneers around to cut through the clutter of bad news and create sufficient positive buzz.

4.    Relevant Communications & Quality Touchpoints in Spanish – Hispanics are facing limited accessibility to key information and touch points in Spanish, thus creating a wave of frustration and discontent. Enrollment forms in some state exchanges, for example, are only available in English making it very difficult to complete the process by limited English proficient (LEP) Hispanic eligibles. In fact, Call Centers are servicing primarily in English – translators are optional, but increase the call duration by about 5x. Who would put up with that experience?

For Millennials and Hispanic exchange eligibles, it is clear that the exchange journey and plan options have not lived up to the reform hype.  Exchange insurers and providers are in a shaky starting place from which to build trusting consumer relationships as they don’t easily forget their first interactions, particularly Hispanics. Repairing the initial experience damage and restoring consumer confidence are difficult to achieve.

The good news is that now insurers, physicians and hospitals begin handling the newly enrolled experiences.  They can welcome the new ACA pioneers, turn around their belief in the system, and provide chummier, clearer engagement and on-going value.  The following tips should be of help in moving organizations closer to a “best-in-class” service provider:

1.    Integrate targeting efforts to Millennial & Hispanics – In order to optimize Millennial acquisition & retention, insurers and health care providers must place emphasis on Hispanic strategies, addressing nuances and synergizing efforts.   

2.    Minimize customer effort and channel switching – insuring consistency and increasing usefulness across consumer touch-points

3.    Deliver “Apple moments” and “wow” customer experiences – making emotional connections with consumers in their language of preference

4.    Accomplish your brand promises – providing transparency, and clear and concise information in every customer interaction. Consumers that trust a brand will meet their expectations are more likely to recommend. They become brand loyalists and vocal brand advocates.

Don’t miss the opportunity to find more business lessons from our ACA customer journey assessment during Santiago Solutions Group’s 2/4/14 webinar  ACA 2.0: Newly Eligibles, New Opportunity, New Demands.  CLICK HERE reserve your space now.

About SSG
SSG is a growth consulting leader driven by management P&L experience, Big Data and predictive analytics. We develop fact-based business models, insights, customer experiences and roadmaps that profitably segment distinct customer groups and drive revenue. We help clients focus their limited resources where the highest ROI opportunities exist and customize strategies advancing efficient Total Market growth fueled by Millennial, Multicultural & Hispanics segments.