Is Blue Cross exchange strategy good or risky business?


Now that the health insurance exchanges are open for business, no insurer has more to gain--or lose--than the Blue Cross Blue Shield plans operating across the country.

Available in almost every online marketplace, Blues plans are trusting in their brand recognition and wide reach across exchanges to boost enrollment numbers, the New York Times reported.

WellPoint, which owns 14 Blues plans, considers exchanges to be a business opportunity that could lead to billions of dollars in extra revenue. In its 2013 second-quarter earnings report, WellPoint estimated its revenue could jump $20 billion by 2016, partly because of the exchanges, FierceHealthPayer previously reported.

One of the risks facing Blues plans, however, is consumers will find very different policies sold on the exchanges than the ones available through employers. For example, many Blues plans are limiting doctors and hospitals from their networks.

Fortunately for the Blues plans, their policies are among the least expensive options in each exchange, research company Avalere Health found. "The Blues are very well positioned," Avalere CEO Dan Mendelson told the Times. "They have great name recognition. They have a very strong understanding of the local market because they have been operating there forever."

One challenge Blues plans, especially WellPoint, must address is pricing their policies low, but not too low. Ideally, WellPoint strives to be affordable enough to stay competitive without becoming the least expensive plan available, says Wayne DeVeydt, WellPoint's chief financial officer.

Most Blues plans believe they have achieved that pricing balance. "We think we've been smart about this," said Bradley Wilson, CEO of Blue Cross and Blue Shield of North Carolina, which is selling plans throughout the state. "We don't believe we're putting the company at risk."

To learn more:
- read the New York Times article

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