After seeing significantly lower than expected enrollment to start the year, the state’s newest insurer, HealthyCT, is shifting its business plan to go after larger employer group customers.
The Wallingford-based nonprofit health insurer, which began selling insurance policies to individuals and small businesses in October, has enrolled about 2,100 people so far, leaving it well behind its year end goal of 30,000 to 40,000 customers.
HealthyCT CEO Ken Lalime said pricing competition and lack of marketing are largely to blame for the slow start, but he hopes expanding sales to large firms will boost their market share. They’ll continue selling to individuals and small businesses.
“Our brand didn’t get picked up quite as well as we hoped,” Lalime said.
HealthyCT got its start in 2012 with a $76 million loan from the federal government, which, as part of the Affordable Care Act, is trying to improve insurance competition.
The company’s mission is to operate as a consumer-oriented health plan and it has used its nonprofit status to differentiate itself from competitors.
The issue, Lalime said, is HealthyCT hasn’t been able to get its message out to enough consumers. Its federal loan agreement limits how much money can be spent on marketing and advertising, so they’ve tried to reach customers mainly through outreach and education.
“Getting brand recognition in a market when all other competitors have been here for a long time is not as easy as one would think,” Lalime said.
HealthyCT’s early struggles underscore the stiff challenges companies face entering Connecticut’s health insurance market, which is dominated by well-known names like Anthem Blue Cross and Blue Shield, United Healthcare, and Connecticare.
Getting customers familiar with a new brand, and comfortable enough to trust it, is a major hurdle to overcome, said marketing-strategy consultant Bill Field.
“The barriers of entry for new brands in established categories are extremely high,” said Field, a former Mintz & Hoke executive who now helms his own consultancy, FieldActivate. “Many companies are forced with having to buy their way into brand awareness.”
As HealthyCT begins to earn revenue, it has begun to invest more in marketing. Lalime is appearing in NBC commercials and the company has purchased ads and wraps on CTTransit buses and billboards.
Pricing competition is also an issue.
HealthyCT is selling insurance on and off the state’s new exchange Access Health CT, but its silver health plans, which are more moderately priced products customers have found most appealing, are 10 percent to 15 percent more expensive than the competition.
That has created roadblocks in attracting price-sensitive customers, particularly individuals who are paying for coverage out of pocket.
“Our silver product wasn’t price competitive,” Lalime said, “but that will be corrected over time.”
As a new insurer, HealthyCT didn’t have the claims and actuarial data history that its competitors have to determine product pricing, Lalime said. As of Feb. 18, customers bought 53,673 private health insurance plans through Access Health CT. Only 3 percent of that market share belongs to HealthyCT.
Moving forward, Lalime said he sees sales opportunities in the large employer market, catering to companies with more than 50 employees. The company faces similar, tough competition: Aetna, Anthem, Cigna, Connecticare, and Oxford Health Plans/United Healthcare.
Moving into the large group market means HealthyCT will have to adjust to a wholesale, rather than retail sales approach, said John F. O’Connell, Jr., president of C.M. Smith Agency in Hartford, which sells large employer plans.
Instead of wooing customers one-by-one in the individual market, the insurer will be dealing with human resource departments and/or brokers who are shopping to cover dozens or even hundreds of lives, O’Connell said.
That could allow the insurer — if it sells competitive products — to pick up a larger number of customers more quickly.
Lalime said HealthyCT always planned to enter the large group market but not until late 2015; its slow enrollment start hastened that timeline.
The company will offer about five large group plans and has begun quoting businesses, Lalime said. HealthyCT does face pressure to build a strong customer base quickly. The firm’s $76 million loan must be repaid in installments within 15 years. To become self-sufficient, HealthyCT must have 25,000 to 40,000 members by the end of 2014.
