Technology has changed the way we’ve done many things over the last 10 years. The way we listen to music, get news, communicate with each other, pay bills and even make “friends” have all seen dramatic impacts. So it should be no surprise that the way we purchase health insurance is changing as well. Americans purchasing their own insurance have already been taking advantage of the new tools and shopping platforms that technology has enabled, but soon, the way we buy insurance will experience a fundamental change that will affect the majority of Americans. In addition to new innovations and inevitable market forces, government legislation will also be a major catalyst that will usher in these changes.
To understand the future, we need a quick primer on the current system. The majority of Americans get their insurance through their employer. The employer owns the policy and decides on the carrier, the plan design and how much of the premium will be required from the employee if they want to participate in the plan. These employer sponsored plans have been decreasing in popularity and participation for the last 10 years.
Now let’s take a look at the present and the future. One of the critical factors that will shape the health insurance market over the next 10 years will be the action taken by the government.
If the recently passed Patient Protection and Affordable Care Act remains the law of the land, the CBO estimates that the purchase of personal health policies will double over the next five years. This estimate will turn out to be low. The PPACA includes many incentives starting in 2014 for people to purchase their coverage on their own and for employers to stop offering employer based coverage. These include state exchanges with government paid premium subsidies based on income and a minimum requirement for employers that will make it an easy business decision to pay a penalty and let their employees look to the state exchanges and personal health plan market to fulfill their health insurance needs.