IBJNews

WellPoint buying private health insurance exchange

Back to TopCommentsE-mailPrintBookmark and Share

Indianapolis-based WellPoint Inc., the largest insurer by enrollment, is buying a private health-insurance exchange to compete for employers with the U.S. state-run marketplaces set to open in 2014 under President Obama’s health-care overhaul.

WellPoint and two not-for-profit health insurers said Tuesday that they are buying a 78-percent stake in Bloom Health, a closely held benefits company in Minneapolis, for an undisclosed sum. Bloom is a two-year-old online marketplace that offers a menu of health plans to about 20,000 workers at almost 50 companies.

Using a private exchange such as Bloom would limit an employer’s costs and provide consistency compared with separate state-run exchanges, each with their own regulations, said Ken Goulet, CEO of Indianapolis-based WellPoint’s commercial business unit.

“We see this as a way of preserving the employer-based market by providing some predictability in health-care costs,” Goulet said.

The state-run marketplaces where people will select health insurance plans are central to the Obama administration’s goal of expanding coverage to as much as 95 percent of Americans. The Congressional Budget Office expects 24 million people to obtain insurance through exchanges by 2014.

A study by New York-based consulting firm McKinsey & Co. said that as many as one-third of U.S. companies are considering giving up employer-sponsored health plans. Instead, they would send their workers to state-run exchanges for coverage, paying a federally mandated fine.

Employers have battled rising health-care costs, which in recent years have grown twice as fast as the consumer price index. Under the Bloom model, companies pay employees a fixed amount to cover a portion of their health-care coverage and workers provide the rest based on the plans they select.

Goulet said the Bloom exchange allows employers to maintain their tax deduction on the money paid annually into an employee’s health reimbursement account to help cover the cost of insurance. He said it also allows workers to pick a plan that suits their health-care needs and how much they are willing to spend.

The idea of the private health-care exchange and its defined contribution model is similar to the trend in retirement benefits in which employers have been abandoning defined benefit pension plans for the relative financial safety of a 401(k) that allows companies to control how much they spend.

WellPoint’s partners in the Bloom purchase are Chicago-based Health Care Services Corp., the largest U.S. customer-owned insurer, and Blue Cross Blue Shield of Michigan, based in Detroit, which already held a minority interest in the private exchange. They bought the stake from Sandbox Industries Inc., a Chicago-based venture capital fund, and a joint venture of Blue Cross Blue Shield plans that invests in start-up health-care companies.

Health Care Services currently operates in Texas, Illinois, New Mexico and Oklahoma. It now will be able to offer employers choices of health plans in the 19 states where Bloom operates, said Martin Foster, president of plan operations at HCSC. The markets covered by Bloom represent about 60 percent of the U.S. population, Goulet said.

“Our objective is to be in all 50 states in the next year,” Goulet said.

Bloom’s customers generally are companies with about 100 to 1,000 employees, said Abir Sen, CEO of Bloom. Unlike competitors that primarily cover the retiree populations of larger employers, Bloom covers workers still on the job, Sen said.

Extend Health Inc. of San Mateo, Calif., is the largest private exchange, covering 300,000 participants. Its customers include Union Pacific Corp. in Nebraska, and U.S. automakers Ford Motor Co., General Motors Co. and Chrysler Group LLC.
 

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. A Tilted Kilt at a water park themed hotel? Who planned that one? I guess the Dad's need something to do while the kids are on the water slides.

  2. Don't come down on the fair for offering drinks. This is a craft and certainly one that belongs in agriculture due to ingredients. And for those worrying about how much you can drink. I'm sure it's more to do with liability than anything else. They don't want people suing for being over served. If you want a buzz, do a little pre-drinking before you go.

  3. I don't drink but go into this "controlled area" so my friend can drink. They have their 3 drink limit and then I give my friend my 3 drink limit. How is the fair going to control this very likely situation????

  4. I feel the conditions of the alcohol sales are a bit heavy handed, but you need to realize this is the first year in quite some time that beer & wine will be sold at the fair. They're starting off slowly to get a gauge on how it will perform this year - I would assume if everything goes fine that they relax some of the limits in the next year or couple of years. That said, I think requiring the consumption of alcohol to only occur in the beer tent is a bit much. That is going to be an awkward situation for those with minors - "Honey, I'm getting a beer... Ok, sure go ahead... Alright see you in just a min- half an hour."

  5. This might be an effort on the part of the State Fair Board to manage the risk until they get a better feel for it. However, the blanket notion that alcohol should not be served at "family oriented" events is perhaps an oversimplification. and not too realistic. For 15 years, I was a volunteer at the Indianapolis Air Show, which was as family oriented an event as it gets. We sold beer donated by Monarch Beverage Company and served by licensed and trained employees of United Package Liquors who were unpaid volunteers. And where did that money go? To central Indiana children's charities, including Riley Hospital for Children! It's all about managing the risk.

ADVERTISEMENT