There is a drumbeat of change being heard in health insurance,signaling a drive towards greater choice and transparency, deliveredthrough digital mediums. But in an industry not known foreither transparency or technology, achieving this goal canbe difficult for both carriers and consumers.

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Before diving into the challenges and solutions this industryfaces, it is worth exploring what is driving this shift towardschoice and transparency. We see two key dynamics that havecome together: consumer demand and plan proliferation anddifferentiation.

Consumers demand choice

Whether consumers receive insurance through their employers ornot, they are demanding choice and transparency for a number ofreasons. First, we are all paying more for our insurance:more for premiums, more out of pocket. And as we do so, we wantto have a say in how and where our money is being spent. Inthe group environment, the wave of change is being fostered by ashift from a paternalistic approach to benefits (i.e., “this iswhat you need”), to offering a menu of options from which employeescan build their own coverage packages.

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Millennials are another factor driving transparency. Studies have shown that this generation wants the ability todigitally research and shop. Four health plan choicespresented on a static PDF doesn’t cut it with a group that is usedto Amazon and other full-bodied online shopping experiences. Not to mention that millennials have their doubts about whethersomeone else can make better choices than they can forthemselves.

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And of course the Affordable Care Act brought health insurance“marketplaces” to the masses through Healthcare.gov and thestate-based exchanges. The introduction of marketplaces hasfundamentally changed how health insurance, and related benefits,are sold and distributed.

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Taken together, consumers are demanding choice and transparency,and want these delivered through a digital shopping experience.

Consumers want choice? Now they needtransparency

In addition to consumer demand, the need for transparency isbeing driven by plan proliferation and differentiation. TakeNew York City for example. In 2016 there are nearly 300 plansavailable to individuals living there. In Portland, Oregon,small businesses can choose from over 600 plans from 14 differentcarriers. Not only do these plans differ in price and design,the related provider networks and formularies differsignificantly.

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Some, including the state of California and Centers for Medicare& Medicaid Services (CMS), are encouraging (or requiring) theadoption of standard plan designs as a means to enable easierapples-to-apples comparisons. The problem with this approachis that some may like Macintosh apples while others likeGalas. Said another way, while standard plan designs may makecomparisons easier, they also inhibit the types of innovation inplan design that can lead to better products for consumers. Abetter solution is tools that help individuals understand and matchplans with their particular needs: their healthconditions, their doctors, theirdrugs.

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This leads us to the challenges facing both carriers and thetechnology companies that are building the tools that bring choiceand transparency to the market.

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The data challenge

Technology companies transforming this space are challenged bythe state of the data needed to enable the functionality they arecapable of delivering. Overall, health insurance data ishighly fragmented, unstructured, non-standard and quite“dirty.” Further, there is incredible churn in this data fromprovider networks that literally change daily to health plan datathat changes quarterly (rates) and annually (designs). Virtually none of this data is available throughAPIs.

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Building, maintaining and making this data useful is onerous andexpensive. And the technology companies developing tools for thehealth insurance market would prefer to focus their resources onbuilding compelling user experiences, while serving differentaudiences through differing business models.

The technology challenge

On the other side of the fence, the carriers are challenged todeliver the data they have to the technology companies that needit. Often, the different datasets (plan, network andformulary) live in different silos within the carrier. Forthose carriers that have grown through acquisition, the problem isfurther exacerbated. Many of them have different systems indifferent states. For these carriers, gathering the data isdifficult enough, let alone structuring and delivering it through amodern API.

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And even if all of the carriers could deliver clean, structureddata through an API, it would still require technologycompanies to integrate with hundreds of different carriers. This is not something most want to do.

Facing up to the transparency challenge

Considering the many challenges that come with providing thetransparency required to make informed health insurance choices,there is a clear need for an underlying data layer to serve theentire industry: a single point of integration for both carriersand technology companies. A source for trueaccurate data to enable innovators and technology companies tobuild solutions, not only to address the need for choice andtransparency, but also for digital health apps where insuranceplays a role. For carriers, this data solution solves their datadistribution challenges.

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When it comes to health insurance, consumers are demandingchoice, and the level of transparency that only a digital platformcan deliver. The drumbeat is being heard, and technology companiesare answering it by developing new and innovative applications. Butthese applications will only be as good as the data that goes intothem.

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