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Obamacare changes the business of insurance

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The Affordable Care Act is accelerating efforts by the state's largest health insurance company to compete for customers.

Just not in the way you may think.

Horizon Blue Cross Blue Shield of New Jersey is interested in picking up previously uninsured people — the intended goal of the ACA. But the company has been investing millions of dollars the past few years in an attempt to transform itself into a more consumer-oriented company.

Horizon is envisioning a new world where people shop for health insurance plans for themselves and their families — instead of depending on their employer to pick their health plan.

“The ACA is going to heighten this movement towards consumerism, where the individual consumer will make more health care purchasing decisions,” said Christopher Lepre, Horizon's senior vice president of market business units.

The ACA hastened this trend: The new online marketplace where individuals can purchase health plans — at least, in theory, though technical glitches in the healthcare.gov site have stalled this — is envisioned as a consumer shopping experience like buying an airline ticket from Travelocity.

Because of it, Horizon expects to sell more plans directly to consumers.

In some cases, employers will guide their workers to so-called “private exchanges,” where the employers provide a subsidy the employees will use to purchase a plan from a menu of different options.

These private exchanges have begun to emerge nationwide in the last couple of years, and last summer, Horizon launched its own private exchange, Horizon Select, where employers can offer workers a menu of plans.

In some sense, the ACA is a massive, nationwide test of how to go about teaching consumers how to buy health insurance.

“Health insurers like us had to modify and retool our marketing efforts, our products and how we interacted with consumers to become a more consumer-oriented business,” Lepre said. “We had to build our online capabilities so that consumers could come on HorizonBlue.com, compare the plans that Horizon offers and buy a plan directly from Horizon's website.”

Donald Savoy, president of the Florham Park benefits firm Savoy Associates, offered his 85-member staff the Horizon Select program last summer.

He gave each employee the same sum of money to spend, and they went to a website to select among five Horizon plans. More than a quarter of the nearly 60 employees who enrolled chose plans that would not require them to contribute to their premiums.

About 25 employees opted out of Horizon Select because they already had other coverage, generally through a spouse. They, however, still got the stipend, which could help cover the cost of their spouse's premiums or pay for additional products such as dental or long-term disability.

Savoy loves the option. In the past, he said, all employees had to contribute some portion of their premiums. But under the new Horizon Select program, “Some are paying about the same, some are paying more, some are paying less — and some are paying nothing,” he said.

Horizon Select is a “defined contrition” health program; the contribution by Savoy is fixed and the employee's contribution varies. Savoy said this enables employers to budget future health plan costs.

“For example, I can budget a 5 percent increase in my health plan cost next year, and if it goes up 7 percent, I can pass a 2 percent increase to the employees. This is a mechanism where (the employer) can mitigate some of these wild swings in benefits costs from year to year.”

The healthcare.gov site has gotten off to a rocky start. It launched Oct. 1 for consumers to buy health plans from insurers and, in some cases, qualify for federal subsidies to help them afford coverage. But technical glitches meant few could access the site.

The Obama administration is vowing to fix the glitches, but in the meantime, the Horizon website and those of other health insurers are open for business and ready to sell health plans to consumers.

“The marketing function (of this company) has been completely retooled in the last few years,” Lepre said. “We're doing more consumer research now than this company ever did.”

In the past, Horizon intensively studied the employer group insurance market because Horizon was in the business of selling health plans to employers, who then offered them to their workers. Lepre said Horizon has retooled its market research to be more consumer-focused.

Horizon has plenty of company in its pursuit of the consumer. Another insurer active here, AmeriHealth New Jersey, has a private exchange, MyAHNJ.

“We have seen a lot of interest from small employers across the state since we rolled it out in August,” said Ryan Petrizzi, the director of sales operations and small markets for AmeriHealth NJ. “It's still a little early to give an accurate number on how many employers have signed up. What I can tell you is that we have received a lot of positive feedback from employers who are interested in this new option and view it as a way to offer their employees valuable benefits at an affordable cost.”

E-mail to: beth@njbiz.com
On Twitter: @bethfitzgerald8

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