Sharpening the Focus on Vision Care Benefits
BY PAUL J. DISSER
Chairman, CEO, and President of Spectrum Vision Systems, Inc.
No fuss. No underwriting. No risk exposure. Just pure profit. This attractive scenario and pleasant bottom-line result is being realized by insurers offering low-cost and much-needed vision care as an enhancement and valuable add-on to the primary package being sold (whether it be group life or health, standard disability income, long term care, dental, or whatever).
Basically, vision care profits stay at the carrier level. If the funds realized flow at all, they do so through typical compensation arrangements to the field force. Many carriers use the revenues generated from the vision income as a premium stabilization reserve. Often, companies that thought they would be forced into a large rate increase, have been able to slice the hike by a considerable percentage.
But the point is that vision can be an enhancement to the main package the carrier is primarily underwriting and can lead to a comfort zone of unparalleled proportions within the marketing arena. There is no underwriting or risk exposure and none of the cost factors associated with the typical underwritten product.
And the need is definitely out there. More than 150 million Americans wear corrective lenses. Current annual expenditures exceed $12 billion on eyewear and $3 billion on eye examinations, according to our research. We expect future projected expenditures to exceed both these figures through the year 2010.
The marketing penetration for vision is less than 35 percent in the U.S. labor force and less than 25 percent among the general population, according to surveys by such organizations as A. Foster Higgins and Hewitt Associates. Slowly but surely this waiting marketplace is being noticed as carriers and distributors alike are awakening to the value represented in well-designed, ancillary benefits such as vision care products.
The majority of the growth has come about through the offerings and efforts of managed care vision care organizations and preferred provider organizations (PPOs) and their networks of independent optometrists. The networks support a large volume of business over a geographical expanse, often nationwide. These provider networks are set up in such a way that 90 percent of the entire U.S. population is no more than a 20-minute drive from a contract provider. Discount card access plans have also grown dramatically in the past few years. These plans typically enable an employee/member to access a provider network to realize savings on frames and lenses, including contact lenses.
Because there is no insurance risk exposure element in the discount card benefit design (all offered is predetermined), the cost for vision care is exceptionally low, ranging from $6 to $12 per year per employee. This type of plan, which is easy to install and convenient to administer, is very popular.
Variations on the theme allow for routine eye examinations, along with discounts on optical services. Such plans can be designed within employers’ budget constraints by managing the frequency with which employees/members can use their vision benefits (e.g., once every 12 or 24 months) and by scheduling the level of reimbursement for exams, frames, and lenses (e.g., $40 for exams, $30 for frames, $30 for lenses). These plans usually range in cost from $2 to $12 per month per employee.
Ancillary benefits additions to small and large employer group plans provide needed services, while creating new sales and revenue opportunities. Success in the managed care vision care arena has prompted requests to companies from satisfied employers for additional ancillary benefits programs. Successful companies in this arena are adept at finding the right match in network development and maintenance, internal operating systems and procedures, marketing and fulfillment materials, and of course, customer service. And it’s important for insurers to spread the word to their brokerages and agencies that after the sale is made, all servicing is handled by the PPO.
The future belongs to insurers with the vision to meet and adapt to needs in an ever-changing industry and marketplace. It belongs to those savvy enough to comprehend the importance of add-on products/services and to offer them.
PAUL J. DISSER is chairman, CEO, and president of Spectrum Vision Systems, Inc., Overland Park, Kansas, a managed care vision care company servicing over 20,000 companies and four million subscribers throughout the United States, Puerto Rico, and the U.S. Virgin Islands.
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