Officials at Horizon Blue Cross Blue Shield of New Jersey think that they might have found a niche customer base. The public health insurance exchanges opening in October will include the Small Business Health Options Program (SHOP) through which companies with 50 or fewer employees can obtain coverage from participating health insurers. New Jersey’s exchange will be run by the federal government.
While Horizon will participate in SHOP, it has also developed a private exchange for mid-sized businesses that want to offer an online menu of defined contribution coverage.
The product, Horizon Select, is being rolled out this summer, tailored for companies with 51 to about 400 employees, says Christopher M. Lepre, senior vice president for market business units. “The private exchange is a response to employers who have told us that they’re looking for alternatives to the standard health insurance model.”
Horizon spokesman Thomas Vincz says, “It’s a private online marketplace, in the sense that public exchanges are also online marketplaces. The difference is that it is private and between the employer and employee and Horizon.”
Under the traditional model, employers charge their employees a set amount, usually 20% to 30% of the total premium, says Vincz. “It’s a defined benefit model,” he says. “Fundamental to the private exchange is a defined contribution approach to benefits.”
Theoretically, employers contribute a defined amount to each employee’s benefits and the workers can then use that money to choose their coverage in the private marketplace created under Horizon Select.
“A private exchange allows more customization of benefits, so employees often find more choices than what they would have under a traditional benefit plan,” says Vincz.
Horizon hopes to have 15 to 25 employers sign up for Horizon Select in the initial year, then to expand it. The gradual approach, says Lepre, should help ensure a smooth transition at a time when the market will be adjusting to the many changes in the Affordable Care Act.
“This is new and different; we want to make sure we execute fully for our customers.”
Wellness will be a big part of making Horizon Select work, says Vincz. “There’s a growing appetite among businesses for health and wellness products, and our own clinician executives are focused heavily on health and wellness — both for our own employees and our 3.6 million members. Hence, the products that will be offered through the private exchange will give more tools and options that help members manage their individual health and wellness needs.”
Wholesale to retail
Lepre points out that the exchanges reflect a shift in the insurance marketplace from wholesale, in which employees receive coverage through their employer, to retail, in which consumers buy directly from, and interact with, insurance carriers.