General Business Issues

Florida Health Plans Use Low-Cost Products to Win Individual Customers

Reprinted from the Feb. 12, 2007, issue of issue of HEALTH PLAN WEEK (formerly Managed Care Week), the industry's leading source of business, financial and regulatory news of health plans, PPOs, and POS plans.

Insurers prospering in Florida's individual insurance market attribute their growth to new lower-cost benefit designs that are designed for various demographic groups, including pre-senior, self-employed and formerly uninsured populations.

With the state's population is growing by as much as 1,000 people a day, there are opportunities for new growth, says Aetna spokesperson Walt Cherniak. The state has a wide diversity in population that supports various benefit designs, and the state has the nation's second-highest proportion of uninsured people.

Aetna, Inc., CIGNA Corp. and Blue Cross and Blue Shield of Florida (BCBSF ) recently launched lower-cost products or expanded availability to smaller group sizes or individuals.

Total membership in the seven largest commercial health plans grew 4.8% to 7.94 million at the end of 2006, up from 7.58 million at the end of 2005, according to a survey by the South Florida Business Journal.

BCBSF grew by 307,000 members to 4.1 million in 2006, and it credits much of that growth to the group of products for individuals that it launched in May 2006 under the name BlueOptions, says Mike Guyette, vice president for sales and distribution.

BlueOptions is a series of limited-benefit plans that are priced 30% to 70% lower than the insurer's conventional products are.

BCBSF will launch more limited-benefit plans in July 2007, Guyette says, including high-deductible products that are compatible with health savings accounts (HSAs). These new plans will streamline the interaction between the HSA and medical-coverage components, he says.

A group that will have an increasing number of choices is pre-retirees, 55 to 64 years old, self-employed or retired. "We're designing plans based not only the size of the group but also the life stage," Guyette says. Those products are compatible with an HSA, have higher deductibles and may require a little more risk sharing by the member, he says.

One low-cost plan offered by many insurers in the state covers inpatient hospitalizations and outpatient surgeries, but requires patients to pay for physician services. The hospitalization-only plans, with premiums that are 30% to 40% lower than full-benefit plans, appeal the most to young healthy people "who think they don't care about physician visits," says independent agent Leslie Glogau.

Golden Rule Insurance Co., a UnitedHealth Group subsidiary offering HSA products, is creating a lot of business, she says, as is Aetna's line of individual products, which launched in Florida in 2005.

HumanaOne, Humana's business unit offering health insurance for individuals, entrepreneurs, self-employed and their families had year-end membership in Florida of 56,000, 10% more than its Florida membership at the end of 2005.

In 2006, Humana small-group accounts grew 23% from 41,000 to 50,000 members in Florida; its HMO mix was stable at 330,000 members. Consumer-directed plans in the state grew at a rate of 10% to 15% per year over the last four to five years and currently stand at about 35,000 members. Twenty percent to 25% of Humana's commercial mix now is in consumer-directed or low-cost high deductible plans, says Jeff Newman, director of small-group sales.

In 2007, HumanaOne plans to expand its business presence in Florida and provide individual health insurance to consumers in southwest Florida (Fort Myers-Naples-Port Charlotte) and the Panhandle (Pensacola-Fort Walton Beach-Panama City), the company tells MCW. Humana is setting up consumer-driven plans in hopes that members leaving HMO coverage will go to them.

In order to ease HMO customers' transition into consumer-driven plans, Humana developed CoverageFirst, which features first-dollar coverage up to $500 for physician office visits, lab tests and X-rays, preventive care, home health care or physical therapy.

Humana also allows employers to enroll part of their work force in higher-deductible products while the rest remains in the company HMO. Humana enhances its dual-option plans by giving employers and members access to data to help direct their care, he says.

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