WellPoint sets up private insurance exchange to compete with states

WellPoint, the nation’s largest health insurer is setting up a private health insurance exchange to compete with those created and managed by governments under federal health care reform legislation. The exchange is a joint effort between WellPoint, Blue Cross Blue Shield of Michigan, and Health Care Service Corporation. The exchange will serve all national markets and create a defined contribution solution for employers.

The insurers took a controlling stake in Minneapolis-based Bloom Health and will now comprise Bloom Health’s Board of Directors. Bloom will remain a separate entity. Blue Cross Blue Shield of Michigan already had a stake in Bloom and expanded its existing interest to a controlling position through the partnership deal.

Bloom Health offers an existing exchange-like platform which allows employers and individuals to compare insurance policies and provides employers with a breakdown of their overall health care spend. Through the Bloom platform employers are allowed to define health spend on a per employee basis and then employees can make their policy choices in Bloom’s health “marketplace.” Several states already have Bloom Health as an option for insurance coverage, the partnership hopes to be in all states by as early as 2013.

Under federal health care reform legislation, states are required to set up a health insurance exchange that allows employers and individuals understand and compare insurance coverage options through online marketplaces. States have until 2013 to set up their own exchange or the US Department of Health and Human Services will establish one for them and administer it. Health insurance exchanges have been controversial for both providers and states that are against federal health care reform overall.

Private solutions like the one offered by Wellpoint may become popular in states that are currently against government involvement in health care. A private exchange option may also be popular with employers, recent employer surveys have indicated that many employers were planning to push employees to state run exchanges and pay the fee for doing so instead of maintaining health insurance coverage themselves.

“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.

WellPoint has been in the news recently for its new partnership with IBM as well as an investigation of premium increases earlier this month. Blue Cross Blue Shield of Michigan worked with Bloom Health earlier this year to pilot a defined contribution health benefit solution to some Michigan employers during 2011, with an expanded rollout in 2012.

The Bloom solution will begin offering limited enrollment for groups renewing in 2012 and will be fully operational for all markets by 2013.

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