Taken together, consumers are demanding choice and transparency, and want these delivered through a digital shopping experience.

Consumers want choice? Now they need transparency

In addition to consumer demand, the need for transparency is being driven by plan proliferation and differentiation. Take New York City for example. In 2016 there are nearly 300 plans available to individuals living there. In Portland, Oregon, small businesses can choose from over 600 plans from 14 different carriers. Not only do these plans differ in price and design, the related provider networks and formularies differ significantly.

Some, including the state of California and Centers for Medicare & Medicaid Services (CMS), are encouraging (or requiring) the adoption of standard plan designs as a means to enable easier apples-to-apples comparisons. The problem with this approach is that some may like Macintosh apples while others like Galas. Said another way, while standard plan designs may make comparisons easier, they also inhibit the types of innovation in plan design that can lead to better products for consumers. A better solution is tools that help individuals understand and match plans with their particular needs: their health conditions, their doctors, their drugs.

This leads us to the challenges facing both carriers and the technology companies that are building the tools that bring choice and transparency to the market.

The data challenge

Technology companies transforming this space are challenged by the state of the data needed to enable the functionality they are capable of delivering. Overall, health insurance data is highly fragmented, unstructured, non-standard and quite “dirty.” Further, there is incredible churn in this data from provider networks that literally change daily to health plan data that changes quarterly (rates) and annually (designs). Virtually none of this data is available through APIs.

Building, maintaining and making this data useful is onerous and expensive. And the technology companies developing tools for the health insurance market would prefer to focus their resources on building compelling user experiences, while serving different audiences through differing business models.

The technology challenge

On the other side of the fence, the carriers are challenged to deliver the data they have to the technology companies that need it. Often, the different datasets (plan, network and formulary) live in different silos within the carrier. For those carriers that have grown through acquisition, the problem is further exacerbated. Many of them have different systems in different states. For these carriers, gathering the data is difficult enough, let alone structuring and delivering it through a modern API.

And even if all of the carriers could deliver clean, structured data through an API, it would still require technology companies to integrate with hundreds of different carriers. This is not something most want to do.

Facing up to the transparency challenge

Considering the many challenges that come with providing the transparency required to make informed health insurance choices, there is a clear need for an underlying data layer to serve the entire industry: a single point of integration for both carriers and technology companies. A source for true accurate data to enable innovators and technology companies to build solutions, not only to address the need for choice and transparency, but also for digital health apps where insurance plays a role. For carriers, this data solution solves their data distribution challenges.

When it comes to health insurance, consumers are demanding choice, and the level of transparency that only a digital platform can deliver. The drumbeat is being heard, and technology companies are answering it by developing new and innovative applications. But these applications will only be as good as the data that goes into them.