Market Overview

Engage or Bust: Obamacare, Insurers and the Need for Innovation


The government shutdown may have overshadowed the launch of U.S. health exchanges, but rest assured there will be plenty of time for these new market places and their enrollees to take the spotlight. Come January 1st millions of Americans that have applied for insurance will see their plans kick into action, leaving us with one significant question: Can health insurance companies innovate in order to handle the financial implications of the Affordable Care Act (ACA)?

To sum it up in an appropriately vague manner: Possibly not (at least not alone).

With potential upticks in claims, an inability to reject applications based on pre-existing conditions, limitations on premium increases and the end of caps on annual payouts, our major market insurers will need to incorporate a little creativity to encourage healthy behaviors, drive appropriate utilization and attract the healthy to offset the expenses of the sick. And while these are lofty goals, they are even loftier in the context of healthcare innovation which has been, at best, haphazardly driven from within the sector leaving behind a slew of poorly conceived innovation centers and products that are decades behind those developed elsewhere.

Of these insurers, a few have been tackling this reality head on through smart acquisitions in the consumer engagement space. The most recent of which has been the acquisition of Boston based engagement platform Healthrageous by Humana Inc. (NYSE: HUM), as reported by MobileHealthNews last week. Healthrageous’ acquisition represents the realization that to incorporate market-differentiating programs, insurers will need to take a look outside their world.

Only time will tell, so as a nation we must wait and see whether major health insurers such as Humana Inc. (NYSE: HUM), Aetna Inc. (NYSE: AET), Cigna Corp. (NYSE: CI) and WellPoint Inc. (NYSE: WLP) can find their own path to innovation, or if their fates rest in the hands of innovative new ventures and savvy acquisitions to keep up with the financial realities of an Affordable Care landscape.

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

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