Ancillary Products in the Health Insurance Industry
Ancillary Products in the Health Insurance Industry;
A Necessity In Today’s Uncertain Environment
“As you may recognize by now, the market for vision
benefits is ripe . . . the only remaining question is, Is it
worth your time to sell?’ Maybe a more appropriate
question is, ‘Can you afford not to sell it?’ ”
by Paul J. Disser
Chairman and Chief Executive Officer
Spectrum Vision Systems, Inc.
Paul J.. Disser is chairman and chief executive officer of Spectrum Vision Systems, Inc., an Overland Park, Kansas based PPO with more than 2,200 independent optometrists under contract throughout the United States. Spectrum is working to create economic opportunity for the benefit of independent optometry.
Disser can be contacted at 8695 College Boulevard, Suite 220, Overland Park, Kansas 66210. Telephone: 913-451-1672
“Try not! Do, or Do Not!”
Yoda, futuristic philosopher of the
Star Wars Trilogy by George Lucas
Every time I hear my nine year old son repeat this line from his favorite movie, I know we are in for a treat. The treat is in witnessing the intensity and passion, the commitment which this particular nine year old dedicates to accomplishing the objective at hand. Whether it is swimming, flag football, skiing or studying, he attacks it with a ferocity that is enviable. Ever since Yoda admonished Luke Skywalker not to “try,” but rather “do,” the- word “try” has carried with it the inference that it is something less than total dedication and maximum effort.
You may be asking, “What does a kid’s movie have to do with selling product in Peoria?” Well, I’m glad you asked. At the Mass Marketing Insurance Institute (MI2) Annual Convention just recently concluded in New Orleans, a number of guest speakers addressed the issue of current and future product availability and its direct impact on agent/broker revenues. Comments ranged from the fairly common and oft heard “Well, we’re in for another rate increase cycle, but we’ll come through it okay just like we always have,” to the rather alarming “If Ted Kennedy, Mike Dukakis and/or the HIAA proposals are approved, there won’t be a need for agents/brokers or even some carriers in the health insurance field.”
A recurring comment throughout the four day convention was the need for benefits marketers and benefit administrators to begin to broaden their revenue base; not to be dependent on one product or one Trust for their income. The idea of developing ancillary product lines such as dental, vision, or pharmacy benefits receives a great deal of attention. A number of you may already be counseling your clients as to the need for coverage in these areas. However, statistics would indicate that the majority of you are not promoting certain of these benefits. Specifically, in the area of vision care.
Over 140 million people in the United States need or wear corrective vision eyewear. The eyewear industry in 1987 was an $8.5 billion dollar industry, and is ranked number seven for 1988 in terms of growth out of 219 industries surveyed by the Department of Commerce. And yet fewer than 25 percent of the workforce has any formal vision care program!
Prior to 1958 there was no viable vision care product to be sold. The advent of the Vision Service Plans, a not-for-profit organization based in California and operating under a prepaid approach, took care of that particular void. Until the early eighties, VSP was the only real game in town, capturing the lion’s share of the market while competing with traditional indemnity vision plans offered by a handful of commercial insurers and an occasional Blue Cross/Blue Shield organization. A good part of VSP’s growth came through various collective bargaining agreements of Taft Hartley union groups.
In the early part of the eighties, along with all of the other changes taking place in the benefits field and the health care delivery system, the first vision care PPO was established. This entity was the first to establish a contractual relationship on a basis other than prepaid or indemnity with the providers of vision services. Over the last five years, this particular type of PPO relationship has developed into the most popular and fastest growing vision benefit alternative in the United States. Since then two other organizations have developed similar vision benefits plans. This PPO concept has been directly responsible for more than 2.5 million people gaining access to vision care benefits in just the last three years.
For those of you who may already be selling an insured plan, this PPO concept has a dual appeal. Most importantly, it allows your client to purchase glasses at something less than retail thereby establishing a lower claims base from which your carrier must calculate reimbursement. This lower claims exposure shall ultimately impact loss experience on a favorable basis thereby lessening the pressure for future rate increases. This lower claims base coupled with the carrier’s indemnity schedule should also decrease and possibly eliminate entirely the out-of-pocket expense of the insured member.
As you may recognize by now, the market for vision benefits is ripe, the product is available and the cost/benefit ratios for the consumer are finally in order. So the only remaining question is, “Is it worth your time to sell?” Maybe a more appropriate question is “Can you afford not to sell it?”
Vision benefits are growing. More and more marketers, administrators and carriers are including the PPO vision benefit as an automatic enhancement with every major medical certificate they issue. From a purely competitive standpoint, it makes good sense to have a vision benefit not only to attract new business but to retain business at renewal.
One company we know is writing over 25,000 new policies a month and each one includes the PPO vision benefit. Another company we are familiar with has completed a two year cycle with the vision benefit and has indicated that its persistency on that particular block of business was measurably improved. Still another marketing TPA we know realized over $500,000 in increased, non-risk revenue from the addition of the vision benefit.
Everyone’s situation is a little different from everyone else’s situation. Which only means that you need to find a source for vision benefits that is flexible and responsive to your individual needs. Once you have found that source, you have to contribute the final ingredient to make the plan work—intense passion, fervent commitment and unqualified dedication to accomplishing the objective at hand. If you do not not have a “vision” for future product offerings, you should have. “Try Not! Do, or Do Not.”
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