How to Create an Insurance Shopping Strategy that Supports a Seamless Consumer Journey

Prospective health plan customers abandon their online purchase anywhere from seven to 70 percent of the time, depending on the health insurance company and member demographics. Each online sale that is lost equals $6K-$20K of annual revenue. If a few hundred users abandon their health insurance shopping cart, it equates to more than $1M in missed revenue. In a competitive insurance market, creating an effective online health insurance purchasing experience is critical to revenue growth and health. However, success is about more than addressing user experience or website design. This insight explores pre-effectuated enrollment, the three phases of health plan shopping, and what every health insurance company should consider when assessing or strategizing this year’s AEP.

What is Effectuated Enrollment? Why You Should Care about Pre-effectuated Consumers

The term effectuated enrollment is defined as the number of people enrolled into a plan and paid premiums that are due for their coverage to take and remain in effect. However, most consumers go through a complex set of steps before paying premiums and enrolling in coverage.

Consumers often compare various plans across different insurance companies, shortlist multiple plans, and finally select a plan they wish to enroll in before paying the premium. Moreover, during the shortlisting process, consumers’ selection and purchasing decisions are often swayed by various factors. Any consumer who can perform this complex set of actions is determined eligible to enroll. However, they may or may not pay their first premium. Hence, they are called pre-effectuated consumers.

Studying pre-effectuated consumers is important because, despite consumer willingness to purchase insurance, enrollment numbers have remained stable over the last five years. In this insight, we will discuss a typical consumers’ health plan selection journey, the factors that affect their decisions during plan selection, and recommendations to help payers guide consumers to make the optimal plan selection for them.

Open Enrollment Trends

In February 2021, 11.3M consumers had effectuated coverage through marketplaces. This represents 94 percent of the 12M pre-effectuated consumers who made plan selections during the 2021 open enrollment period. Comparing year-over-year trends shows plan selections this year increased by six percent from 2020 despite a decline in new consumers. While the data in Figure 1 indicates that pre-effectuated member numbers have remained stable, the federal government acknowledges that there is room for improvement.  

 Individual exchange enrollment estimates
Figure 1: Individual exchange enrollment estimates. Source: Department of Health and Human Services (HHS) and Congressional Research Service.

The HHS report breaks shows these trends:

  • New consumers declined by 3.6 percent while the number of renewing consumers with active plan selections increased by 13.2 percent
  • Renewing consumers who were automatically re-enrolled increased by 4.4 percent
  • Total plan selections increased by 6.0 percent

Federal agencies acknowledge that a primary reason for this increase is the increased availability of online consumer resources due to the pandemic, widespread Internet adoption, and demographic changes.

Consumers increasingly use online means like web portals and mobile applications to enroll in coverage. As a result, these online tools attracted a higher proportion of consumers than all other channels. The number of pre-effectuated consumers who selected a plan through web portals and other online channels grew from 520K in 2020 open enrollment (OEP) to a staggering 1.13M plan selections in 2021 OEP.

Understanding Health Plan Consumer Behavior Online

As payers build more consumer-focused products and offer digital health experiences, they will go head-to-head to attract new consumers and keep their existing consumers from switching. Those companies that gain a competitive advantage understand how consumers behave online before making their plan selection. Here, we highlight essential touchpoints and their influence on consumers.

consumer decision journey-
Figure 2: Consumer decision journey.

Health Plan Shopping: Research Phase

A typical consumer’s health insurance purchase journey begins with research. Aggregated search engine research data dating back to 2010 points out that all three types of consumers — new, active/renewing consumers returning to shop for a plan, and automatic enrollees — had an average of five touchpoints, including online (search engine, social media, government websites, insurance company website) and offline (phone, word of mouth, catalogs) during their research phase.

94% of consumers used search engines to research and shop for health insurance in 2020 compared to 80% in 2013.

Search Engines are Key

Search engines came out on top and social media came second in these touchpoints. In fact, 94 percent of consumers used search engines like Google to research and shop for health insurance in 2020 compared to only 62 percent in 2001 and 80 percent in 2013.

Generational Differences

In the last enrollment period, 50 percent of millennials and Generation Xers researched insurance information online compared to only 25 percent of seniors. Moreover, 41 percent of millennials searched for cost information upfront, compared to only 18 percent of seniors and 21 percent of baby boomers.

Consumers are Comparing

Over 68 percent of consumers surveyed said they considered multiple providers at the beginning of their research. Below are some of the most efficient ways to capture consumer attention during the research phase.

Research Phase Recommendations:

  • Focus and invest in digital marketing, search engine optimization, and digital ads since it is now a critical battleground to attract consumer attention
  • Private insurers, online marketplace vendors, and governmental agencies need to ensure their results take the top spot in search engines and social media
  • Google and Bing ad data suggests that paid ad competition is cutthroat as insurance keywords are among the most expensive and competitive since consumers have a high lifetime value
  • Social media is effective to promote and convey important health insurance information like enrollment dates, coverage, information, and plan options

Health Plan Shopping: Evaluate Phase

Once consumers conduct their research and form an initial impression, they conduct active evaluation, systematically comparing plans and narrowing options.

Since consumers tend to compare plans among several health insurance companies via web portal marketplaces before making a final selection, their experience should offer critical features:

  • Comparing and shopping plans across multiple marketplaces
  • Provide easy-to-understand quality and cost information
  • Utilize government subsidies, tax credits, and cost-sharing on premiums that reduce out-of-pocket expenses, if the consumer qualifies for such perks

The typical consumer experience is far from pleasant, however. Research conducted by Columbia University’s decision sciences center and policy illustrates how overwhelming it is to shop for health insurance. More than 50 percent of U.S. consumers have limited knowledge of health insurance terms, and most healthcare exchanges presented consumers with complex products, excessive choices, and complex language.

Health Insurance literacy by major city
Figure 3: Health Insurance literacy by major city. Source: Policy Genius.

Only 12% of health plan members pick the most cost-effective and correct drug benefit plan for their needs.

Selecting the best health plan requires skills in mathematics, probability, and long-term forecasting. Lack of healthcare literacy is one aspect of this challenge and math skills are the other. Research published by Johnson et al. from Columbia University revealed that only 12 percent of health plan members pick the most cost-effective and correct drug benefit plan for their needs. The paper notes that when individuals weigh out-of-pocket expenses against monthly premiums along with their age, history of medical illness, and expected expenditures, most consumers often select the costliest plan per month that have lower copays and deductible.

However, consumers in their early adulthood, who don’t see a provider often, select a cheaper plan with higher copays for doctor visits. Consumers inherently have little idea about the probability of spending for healthcare and a strong bias in valuing copay dollars more than premium dollars.

As a result of poor healthcare and economic literacy, most consumers select incorrect plans as they focus on costs without carefully considering out-of-pocket expenses for the upcoming year, expected usage, benefits needed, or anticipated spending. While most consumers might be losing money, this behavior can be detrimental to consumers with low incomes. For example:

  • Consumers selecting higher-deductible plans may be unable to afford them throughout the enrollment year and might discontinue payments
  • Consumers unaware of potential government subsidies or cost-sharing options might not enroll in the first place
  • Consumers enrolling in incorrect plans may spend more for their healthcare and face extreme economic burdens, including bankruptcy, which affects all future enrollments

Evaluate Phase Recommendations

  • Web portals: Eliminate jargon and explain key terms in more straightforward language. Consumers confronting unfamiliar terminology on marketplaces result from poor information design and presentation, which has a significant and negative effect on how consumers understand health plans and their value.
  • Offer mobile apps that contain information and glossary sections for consumers alongside expanding definitions on the shopping section through “hover over hyperlinks” or “select and define” features usually found in e-readers and smart tablets.
  • Calculating healthcare costs: Research highlights that most consumers do not calculate their healthcare costs correctly and select costlier plans.
  • Leverage smart choice architecture and self-service capabilities that allow consumers to explore all prices by including additional variables like specific medications and procedures.
  • To help customers make better decisions while selecting plans, go beyond offering cost estimators, out-of-pocket calculators, or plan quality ratings. Include price and quality differences ranked by dollar or star symbols instead of numbers.
  • Graphical data: Research indicates that people process information better when data is presented graphically and when vital information like deductibles, copays, out-of-pocket, and premiums are shown side-by-side for comparison.
  • Features to include: Pagination, sorting, and filtering — based on total costs instead of premiums — limits information overload and framing bias in helping consumers select the right product.
  • Plan differences: Web portals should clearly explain differences between standard plans and plans with tax benefits, subsidies, and cost-sharing.
  • Drug and provider coverage: Provide indicators that highlight which drugs and providers are covered by a plan, instead of filtering out plans based on providers and medications, leads to a better consumer experience

While consumers learn about and explore the different plans offered, often that’s where consumer engagement ends.

Health Plan Shopping: Purchase Phase

Once a consumer has traveled through the complex maze of research and analysis, the moment of truth is ensuring that the consumer sticks with the plan selected and following through to payment and final purchase. While consumers learn about and explore the different plans offered, often that’s where consumer engagement ends. Unfortunately, the plan discovery and sign-up process are tedious, complicated, broken, or all three, halting the purchasing phase.

Know Consumer Cues for Purchasing

The number one cue consumers exhibit when they are getting ready to purchase occurs when the prospect begins the registration/sign-up process. A consumer who starts the process indicates that they have finalized their plan choice and are ready to purchase. The website’s primary purpose is to “close” the sale and guide the consumer through the sign-up and payment.

Considering that consumers have less than two months to carry out these three phases, streamlining and simplifying every phase critical to success in this final phase.

Why does a consumer abandon the website after they’ve spent hours researching, and even initiating the sign-up process? Here are the top ten reasons:

  1. They were required to create an account
  2. They were asked to provide information they didn’t have readily available
  3. Lengthy forms ask to enter too much information
  4. Consumers didn’t feel safe entering their private or payment information on the website
  5. They didn’t find additional information about the plan they selected
  6. They didn’t find contact information to call or email with questions or to request help resolving future issues
  7. Unexpected costs weren’t revealed sooner
  8. Constant website redirects
  9. Website had errors, crashed, or was too slow
  10. Limited payment options

Purchase Phase Recommendations

  • Multi-channel contact options: Some consumers need in-person assistance or help over the phone. Payers can aid consumers in various ways during the shopping phase by displaying all channels to contact customer service or include features like live chat prominently.
  • Service design and user experience: Plan and arrange staff resources, infrastructure, communication, and material components to optimize quality and the interaction between the service provider and users. Service design ensures that the entire process is one seamless experience across multiple channels for all consumers.
  • Minimize information requirements: While collecting demographic information is essential to provide accurate information regarding available plans and premiums, requesting this information also creates a burden on consumers who might simply prefer to browse the site.
  • Website features: Engage more effectively by collecting information in chunks and cache data to autofill web forms presented during purchase.
  • Progress indicators: Give the customer clear progress indicators using progress bars, which provides users with a feeling of progress towards purchasing a health plan.
  • Retargeting: Use cookies effectively and retarget consumers using emails. Retargeting uses cookies embedded in email messages to display digital ads to the consumers as they browse the web and check emails.
  • Multichannel marketing: Use HIPAA-compliant retargeting technology alongside email marketing to send an email immediately after the consumer abandons the website to address their concerns and bring them back. Let them know that their information will be available for a certain number of minutes/days if they change their mind or provide alternative methods to contact customer service to resolve their concerns and finalize.
Conversion rate by time after shopping abandonment
Figure 4: Conversion rate by time after shopping abandonment. Source: Re-joiner Data.

40% of consumers abandon a website that takes more than 3 seconds to load.

  • Session regeneration: Help the consumer get back to their plan selections directly from the retargeting email and complete their purchase. This approach helps the consumer finish the purchase with the fewest clicks. If consumers must refill the forms and plan selections, they might decide it’s too much effort and opt-out of the purchase.
  • “Save for later” button: Display when a consumer starts the research phase. This not only saves the progress but, based on behavioral cues research, shows that many consumers revisit their choices before making a final purchase.
  • Faster experience: Boost site speed since conversions is highly correlated with faster website load times.
How website performance affects shopper behavior
Figure 5: How website performance affects shopper behavior. Source: Akama
  • Seamless payment experience: Making the payment experience seamless plays a critical role in initiating and continuing coverage. Paper notifications and receipts can get lost, and keeping track of various payments — premiums, deductibles, and copays — leaves consumers confused on how much to pay and for what.
  • EBPP systems: There’s no single integrated platform that sends out notifications, generates bills, and processes payments in some cases. Move from older billing systems to an integrated and secure electronic bill presentment and payment (EBPP) system.
  • EBPP systems support multiple payment options, which is especially important for engaging younger prospective members who expect third-party payment methods like Stripe, Google Pay, PayPal, and Venmo.

How Well Does Your Insurance Shopping Strategy Support a Seamless Consumer Journey?

As health plans conduct more business online and through digital channels with more consumers across all demographics, it’s paramount that payers remove every barrier that could thwart the final sale in each phase. When a well-designed shopping strategy supports a seamless consumer journey, payers maximize revenue opportunities, improve performance and financial metrics, as well as a create a stronger competitive position year-over-year across all markets.


Manikandan Palani
Manikandan Palani
Senior Project Manager

Manikandan Palani is a senior project manager with SDLC Partners. He has successfully managed multi-million-dollar projects for healthcare and government clients. He specializes in managing web application development teams...

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