Health Care Service Corp. (HCSC), WellPoint Inc. and Blue Cross Blue Shield of Michigan announced last week a joint effort to offer a nationwide private insurance exchange and defined contribution solution for employers via an investment in Bloom Health.
Bloom, founded in 2009, works essentially as an online insurance broker offering – either directly to employers or through insurers – a web portal where consumers can answer questionnaires aimed at matching them with an appropriate insurance product. By taking a majority interest in Bloom, the three insurers are angling to provide options for employers as they increasing turn to defined contribution health plans for their employees. It will also look to compete for business with those health plans on the state health insurance exchanges.
[See also: CMS tap Terremark cloud services for insurance exchanges; HHS awards $185M more for insurance exchanges]
With defined contribution health plans, employers contribute a defined amount of money per employee that the employee uses to help buy health benefits. Employees are then responsible for choosing among a variety of health plans to match with one that best fits their healthcare needs and budget.
"Currently, rising health care costs are top of mind for organizations of all sizes," said Abir Sen, CEO, Bloom Health. "Bloom Health is an important option that assists companies in responsibly managing the rising costs of health care, while at the same time making it simple, engaging and valuable to its employees."
Until now, Bloom's business has focused on employers in the upper Midwest. Earlier this year, it announced its first private exchange for a health insurance company when Minnesota-based Medica began offering about 20 of its health plans via its own exchange, as well as with BCBSM for its Michigan customers.
Now with WellPoint (the country's largest private health insurer), HCSC (the largest member-owned health plan) and BCBSM (which already owned a small stake in the company), Bloom intends to roll out their private exchange in all 50 states by the end of 2012.
"We believe private exchanges will be an important solution as the rising costs of health care leave employers searching for more predictability in their health care spend," said Ken Goulet, executive vice president, and president and CEO of WellPoint's commercial business unit. "The combined leadership, technological capabilities, brand reputation and market presence make this a natural strategic fit to providing our customer base with the best value and their employees with convenience and choice."
When it comes to the choice for employees, it is clear that one choice Bloom intends to provide using the muscle of its new majority owners is as an alternative to the state insurance exchanges set to be operational in 2014 as mandated in the health reform law.
One leg up a national private exchange could have over state exchanges is the ability for large, multi-state employer to have access to a consistent package of benefits for their employees. In addition, there is some trepidation among private enterprise about the state-run exchanges.
"Some employers we've spoken to are not completely comfortable with state exchanges," Sen told the Minneapolis StarTribune. "They don't know about customer service, they don't know what variety of plans will be there. They'd prefer their employees stay in a private exchange that they can design or we can design for them, so they can limit their liability."