Health insurance policies being sold in storefronts
Blue Cross Blue Shield plans to sell health insurance from storefronts as insurers push individual coverage during the recession.
BY JOHN DORSCHNER
As laid-off workers lose benefits and the nation’s leaders discuss sweeping healthcare reforms, one insurer plans to sell health insurance the same way others market cellphones or iPods — through retail stores.
Blue Cross Blue Shield of Florida, which already had a storefront operation for more than a year in Pembroke Pines, is preparing a major expansion of five to eight new stores around the state, including several in South Florida.
”Health insurance is complicated and we know it,” said Blue Cross spokesman Doug Bartel. “Some people like face-to-face interactions, and that’s what we’re providing.”
Blue Cross and many other insurers are pushing hard on individual health plans, the type sold in the stores, because the recession has caused many to lose employer-based group coverage.
Aetna reports individual plan sales are up 22 percent in Florida for the first six months of 2009. Blue Cross saw an increase of 15 percent in individual policy requests over the past eight months.
Many are opting for less expensive, high-deductible policies.
Aetna’s most popular individual plan this year has a $5,000 deductible. Blue Cross reports its most popular carries a $1,500 deductible, followed by 100 percent coverage. One such policy for a healthy family of four (45-year-old parents, kids 11 and 8) will cost $920 a month in Miami-Dade and $973 in Broward.
In fact, even before the recession, insurers say this region was crucial for individual plans. ”There’s no secret that South Florida is one of the top individual insurance markets in the country,” said Eric Cormier of Aetna.
The reason: The region has many small companies that don’t provide health benefits.
Still, individual policies have serious limitations. They ”are usually the least cost-effective ways of getting health insurance,” said Ron Pollack, president of Families USA, a Washington-based healthcare consumer advocate.
”Those policies have much higher administrative costs and as a result you get less for your premium dollar that you would with group plans,” Pollack said. “Additionally, individual plans are the ones most likely to discriminate against people with pre-existing health conditions.”
About 15 to 20 percent of an individual premium goes to the broker’s commission, said AvMed Vice President Javier Mendoza. “Some go as high as 25 percent.”
Even so, AvMed’s individual policies has seen ”a good amount of activity” since the Miami-based insurer started marketing them in January.
At present, BCBS rejects 13 percent of individual applications, Humana 15 to 20 percent. Many of these applicants have expensive chronic diseases. ”You can’t insure a house that’s on fire,” said Amy Powers of Humana, “but I don’t think we should be portrayed as always rejecting a sniffling nose.”
For the young and the healthy, individual plans make sense. At the Florida Blue store in Pembroke Pines this week, Edwin and Viviana Rosario came to get a family policy. They talked to a sales rep while their children, 9 and 5, played nearby on a store-provided video game.
”I love the Web, but I wanted the one-on-one,” said Viviana about their trip to the store after she had tried the 1-800 number and the Blue Cross website.
She recently left her job at Sony, which had provided their health coverage, and her husband is a self-employed electrical engineer. They decided on a high-deductible policy to keep their costs down while getting protection from catastrophic illness.
The Pines office, in muted blues and beiges, is designed much like a cellphone store, Bartel said. A concierge greets people at the door. Salesmen have glass-enclosed offices for privacy.
One area has computers on pedestals, so sales reps can show customers how to navigate the Blue Cross website to find providers or check on claims.
”We’re still working out what’s the right mix — service, information, sales,” Bartel said.
Consumers can also check their blood pressure.
The location gets about 50 visitors a day, he said. Near the end of the year, it will be filled with seniors learning details about enrolling in Medicare health maintenance organization plans.
Like most health insurers, Blue Cross is heavily committed to the Web. ”But different people like different ways of getting information, so we’re offering alternatives,” Bartel said.
AvMed has a storefront in Hollywood aimed at Medicare seniors and is considering more retail stores for younger customers. ”The whole industry, especially the individual side, is emerging and evolving, with more options for consumers,” Mendoza said.
Cormier at Aetna said the company is happy working through brokers and doesn’t feel the need for storefronts. Humana has about a dozen Guidance Centers, including one in Tamarac, that are aimed at the Medicare crowd, but sees no need to expand the concept at present.
Many insurers say they are keeping their options because it is uncertain what healthcare reforms will bring.
”We’re ready for anything,” Bartel said.