Health law could shift insurers toward individual customers

For Independence Blue Cross, the largest health insurer in Southeastern Pennsylvania, Tuesday's arrival of a government-mandated health insurance marketplace marks a major pivot toward insurance plans for individuals.

IBC estimated that from 500,000 to 600,000 people in Philadelphia and the four surrounding Pennsylvania counties could shop for insurance on the federal exchange, either because they have no insurance now or are likely to shop on the exchange for other reasons.

That represents a huge business opportunity, but it won't happen overnight.

"It's not a big bang, so we don't think effective [Tuesday], everyone is going to enroll," Brian Lobley, IBC's senior vice president of marketing and consumer business, said Monday.

"We don't think by March 31 everyone's going to enroll," said Lobley, referring to the first open enrollment period created by the Affordable Care Act, called Obamacare by some. "But we think that people will begin to migrate year over year. As such, we're expecting that market to grow for us."

IBC now insures just 70,000 people under individual plans in the region, compared with 2.1 million people under group plans, including 150,000 with Medicare Advantage and Medigap insurance, IBC said.

IBC estimated that 270,000 people in the region were now covered by individual plans as opposed to employee-sponsored plans. IBC says it believes it can attract customers from that group and the uninsured with its individual coverage plans through the exchange.

Experts say growth in individual coverage will accelerate.

"In five to seven years from now, health plans will be 50 percent group customers and probably 50 percent individual customers," said Bill Copeland, the Philadelphia-based leader of the health plans practice at Deloitte, a consulting firm.

Blue Cross insurers' "business is definitely going to be changing fairly rapidly, and they definitely are going to become more consumer-oriented."

Lobley said IBC had taken a page from political campaigns and consumer-products companies to carefully tailor its marketing efforts to individuals.

For example, in the Hunting Park section of North Philadelphia, the company has been trying to educate people about what health insurance is. In Abington, on the other hand, the focus has been on what people should expect from the exchanges - the online marketplaces for comparing available plans and their fees, Lobley said.

As to insuring individuals, Chuck Maleski, a senior vice president at USI Insurance Services, said the Blues have experience. "In Pennsylvania, I would say that the Blues are better positioned than some of the public companies" because of their history as insurers of last resort, Maleski said.

IBC, which will have 13 plans on the exchange, provided a glimpse at prices: The cheapest individual monthly premium for a 40-year-old nonsmoker will be $237.64, and the most expensive coverage for that person is $435.41.

When the exchange opens, IBC's only competition in Southeastern Pennsylvania will be Aetna, which did not provide rates Monday. Aetna is offering six plans, including the catastrophic coverage available for some people under 30.

Three companies, Horizon Blue Cross Blue Shield of New Jersey, AmeriHealth New Jersey, and Health Republic Insurance of New Jersey, are offering plans in New Jersey.

Horizon, the biggest insurer in New Jersey, said only that it was offering five plans on the exchange.

Two of IBC's exchange plans include tiers in addition to the four tiers of coverage established by the Affordable Care Act, termed platinum, gold, silver and bronze, with platinum most expensive and bronze least. The tiers in IBC's plan have additional effect on out-of-pocket costs for the insured, a new element for the 75-year-old company.

IBC's tier with the least out-of-pocket expenses at the of service, called Tier One, includes 50 percent of all the hospitals, 40 percent of the primary-care physicians, and 40 percent of the specialists in IBC's network.

"Tier One will minimize their out-of-pocket costs," Lobley said. "We feel that it's a very viable network. We are not cutting anybody out of the network. The entire network is available, but as you move up into Tier Two or Tier Three it's more out-of-pocket costs for the consumer," Lobley said.

There are 18 general hospitals in Tier One, including Hahnemann University Hospital, Albert Einstein Medical Center, Abington Memorial Hospital, Crozer-Chester Medical Center, and Doylestown Hospital.

"The whole network is available, but you have to pay more if you go to Tier Three," Lobley said.

How much will IBC insurance cost? It depends on the plan. A8.

Educating consumers is Job One on the health law's first day. A11.

Now comes the health law's ultimate test: The verdict of the public. A11.

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