U.S. health insurers will face challenges over the next decade as they expand their marketing to individuals who in many cases will be less educated and poorer than their current policyholders, according to a report released on Tuesday.
As a result of the Patient Protection and Affordable Care Act, 30 million Americans are expected to gain access to health insurance through regulated exchanges in each state, more plans from employers, and an expansion of the federal Medicaid program for the poor.
It will be easier and cheaper for these new customers, particularly on the health exchanges, to switch providers, said Vaughn Kauffman, a principal with PwC Health Industries, which prepared the report.
"What we've seen with this group, which is a little bit less educated with lower incomes, is that most of their decisions are going to be driven based on price initially," Kauffman said.
Insurers will need to change their marketing to a retail model, including using technology and social media, he said.
PwC Health Industries is part of consultancy PwC.
The median income of the incoming group of health insurance customers will be about 166 percent of the federal poverty level, or $38,263 for a family of four, the report said. That is about half the currently insured's median of 333 percent of the poverty level.
In terms of education, PwC said it expected 14 percent of the newly insured to hold a bachelor's degree or higher, compared with 37 percent of the currently insured.
About 42 percent of the new group will be employed full-time, versus 59 percent of current policyholders, and about 30 percent say English is a second language, compared with 12 percent now.
Excluding children, the median age of the newly insured will be 38, compared with 42 for people who have insurance now.
Of the 30 million people expected to become insured over the next decade, about 45 percent will buy health coverage through state exchanges, PwC said.
Currently, only a few states have public health exchanges.
About one-third of the 30 million will become covered through Medicaid, and the remaining 25 percent will receive coverage from employers, according to the report.
The healthcare exchanges will create a $205 billion market from insurance premiums by 2021, the report said.
States have a November 16 deadline to report on their plans to the government. Some states have already announced that they will run exchanges themselves or with the federal government, while others have resisted the mandate to create the exchanges.
About 12 million Americans are likely to begin enrolling in these exchanges next year, the report said.
(Reporting by Caroline Humer in New York; Editing by Lisa Von Ahn)