Independence Blue Cross is introducing lower prices for new small business customers.
Effective December 1, IBC would begin offering new medically underwritten PPO, HMO and direct point of service Blue Solutions to small businesses that are new customers.
“The men and women who own and operate the tens of thousands of small businesses in our region face unique challenges when choosing health coverage — challenges that we understand — and we are committed to offering small businesses health plans that fit,” said Daniel J. Hilferty, IBC’s president and CEO.
“We are expanding the number of choices small businesses have for health coverage and offering highly competitive rates for new small business customers — as much as 30 percent lower than rates we previously offered.”
With the introduction of the new plans, IBC becomes the only health insurer in the region offering a medically underwritten HMO to small businesses.
In January, IBC introduced Blue Solutions, a streamlined suite of health plans that offer ways to help businesses with fewer than 50 employees control expenses.
“As a result, about half of our customers with 10 to 50 employees got premium rate reductions when they renewed their health coverage with us for 2011,” said Brett Mayfield, vice president of sales.
“When we begin to offer medically underwritten plans in December to small businesses that are new or former IBC customers, we will also be able to provide lower, more affordable rates than in the past to many more small employers.”
The new HMO health plan with medically underwritten pricing will help small businesses that want to lower costs while still satisfying their employees’ preference for Blue health plans.
Starting October 3, IBC will begin providing initial rate quotes for these new medically underwritten health plans to potential new small employer customers with two to 50 employees. Generally, businesses whose employees need fewer health care services qualify for lower rates.
“IBC’s move to medical underwriting for small group customers is a boost for many small business owners in the region,” said Jerry McGlone, president of the Greater Philadelphia Association of Health Underwriters (GPAHU), the region’s broker association.
“With the new rating methodology in place, I would expect IBC to be more aggressive in its pricing, which will result in increased competition among the major carriers and more options for small employers.”
IBC is the only insurer in the Philadelphia market that has not been medically underwriting health plans for small employers. Since competitors began offering exclusively medically underwritten coverage to small businesses in 2003, IBC has lost a significant number of customers as small employers with more healthy employees left IBC for the lower, medically underwritten rates available through other health insurers. For many small group customers who wanted a Blue health plan, there was no affordable Blue option.
“This change for small businesses can provide lower costs for many customers because it levels the playing field among all carriers, and allows the risk to be more evenly distributed across insurers, while also creating an easier transition into 2014, when health care reform takes effect,” said George Rosiak, general agent for Emerson Reid & Co. in Plymouth Meeting.
“This also creates greater opportunity for clients to benefit from their brokers’ expertise in a more competitive marketplace.”
Rosiak, who serves a large number of small business customers, added that in working with new customers, he recommends they shop the market to find the best possible fit for their businesses. With all carriers offering similar rating criteria, he would recommend customers base their buying decisions on network, carrier stability, personal demographics, and selecting a brand they trust.
Mayfield expressed how the pricing for IBC’s new small business will work.
When a small business expresses interest to its broker in a health plan from IBC, he said, the broker will provide IBC basic demographic information about the company’s employees and will request a rate quote. IBC will then provide an initial quote, based on the employees’ age and gender information and the assumption that the employees are healthy, Mayfield said.
Then the broker will ask the business’s employees to complete questionnaires about their medical histories over the past five years, he said. IBC underwriters then review the questionnaires to provide a final premium rate quote, on average, within three business days, Mayfield concluded.
“We care about all of our customers and our current small business customers will continue to get competitive rates when they renew their contracts,” Mayfield said.
He explained that beginning in January 2011, IBC changed how it set rates for its renewing small businesses and began basing rates on five factors: age, gender, location, size and claims experience.
IBC continues to use this pricing methodology for current customers, and this year, 47 percent of customers with 10 to 50 employees got rate reductions with their plan renewals, while 70 percent got new rates that were below medical cost trend, which is a measure of the increase in the costs of medical services.
Before January 2011, IBC provided pricing for new and existing small business customers based primarily on three demographic factors — the age, gender, and family status of those enrolled.