Global payments leader Visa kicked off the new decade with the massive, $5.3-billion acquisition of fintech startup Plaid. Often described as the digital “plumbing” linking the modern financial services industry, Plaid connects consumers, app developers, banking institutions and tech companies through behind-the-scenes APIs.
Prior to Plaid connecting these various parties, there existed within the banking industry systemic pain points that curbed innovation and made building better user experiences a difficult, expensive and time-consuming endeavor. Plaid’s most consequential achievement — facilitating the banking and financial services sector’s digital makeover — serves as a prime example of what’s possible when development-killing barriers are removed and a new era of connectivity is delivered to a sector ripe for digital disruption.
Plaid’s ultimate legacy lies not only in the industry it has already transformed, but in how other complex ecosystems are adopting its middle-layer, many-to-many platform business model. Health insurance and employee benefits — a diverse ecosystem of carriers, tech platforms, consumer applications, HR and benefits companies, online marketplaces and brokers — has commenced a similar digital revolution.
Data: The Key Ingredient
Like banking and financial services, the health insurance and employee benefits space has thousands of tech companies working to develop digital products and services built specifically to meet today’s modern user expectations. But in order for groundbreaking tech platforms to truly transform this industry, they need digital infrastructure — the “plumbing” — that facilitates the exchange of data and transactions within the industry’s complex system of insurance carriers, benefits brokers, agents and related stakeholders.
Why is the exchange of information essential to spurring a digital revolution in health insurance? Imagine you’re a mobile app developer whose primary objective is to build a user-friendly platform for consumers to shop for, purchase and enroll in health insurance.
At first glance, this appears simple enough. But dig deeper, and you quickly encounter data and connectivity related pain points that developers in the health insurance space have experienced for years, much like those in banking before them. Those pain points include:
- Establishing and maintaining relationships with hundreds of carriers takes time and significant development resources.
- Aggregating and maintaining accurate plan benefits and rates, and doctor and drug data from these insurance carriers, each of which delivers these data in different formats through different means, is technically laborious and expensive.
- Normalizing and structuring these data so as to make it useful for the intended application.
- Establishing enrollment connectivity where standards are illusive, exceptions and “edge cases” are the norm. Even terminology differs between carriers.
Developers and tech platforms have found it challenging to address these pain points while also building the user journeys they envision. They hit a “data wall” that they assumed would simply not exist. They often end up spending as much time, resources and energy on building the data and connectivity necessary to power their application as they do building the features and functionality they set out to create: all because the infrastructure they assumed would exist, does not.
Modern APIs: The modern means through which data is transmitted
Enabling developers and tech platforms to access data is a crucial step toward propelling the health insurance ecosystem into the digital age. However, the industry has lacked a mechanism to exchange insurance data between carriers and tech platforms. That’s where APIs enter the picture, a savior to this complex problem in connectivity.
Much as Plaid’s APIs empower tech platforms to integrate banking data into their applications — and, critically, exchange information with banks and financial services institutions — APIs are now binding together the health insurance space; connecting, translating and exchanging data between carriers, developers, brokers, consumers, businesses and tech platforms.
We all want transparency and access to critical information about our health and benefits coverage; especially in these times of COVID-19. We all expect modern and intuitive digital experiences. But data and connectivity walls have held back innovative solutions to deliver on these expectations. That’s all changing now. To crash through these walls we must look only to the recent past: other industries have solved similarly complex issues. APIs are the foundation upon which the future of health insurance and employee benefits is being built.