HealthNow crafting retirees' insurance
22 04 08 - 13:38
Company making plan specific for population
By Jonathan Epstein
Updated: 04/22/08 6:44 AM
The parent of BlueCross BlueShield of Western New York is developing a new insurance plan geared specifically for early retirees who are no longer covered as active workers but are not yet eligible for Medicare.
Buffalo-based HealthNow New York officials said the company is still in the early stages of creating the new product, aimed at consumers aged 52 to 64. The goal is to develop something that would be affordable for both retirees and the employer, and hopefully to launch it for next year.
"It's really in the research phase in terms of what market demand is and what opportunities might exist," said Kerri Garrison, director of research and development.
The company already has products that will serve the early retiree market, but they are broader and not designed specifically to meet that group's needs or cost constraints.
Garrison stressed, however, that the company won't rush out a product if it won't work.
"We won't just introduce something to have something there," she said. "It will meet the needs of that particular segment."
Like HealthNow, rivals Independent Health Association and Univera Healthcare also have products that early retirees can use, but they're not targeted to that population and nothing specific is under development.
However, Williamsville-based Independent Health is exploring the same issues, talking with employers, brokers and the state "to find out what opportunities are best for this market," said Melissa Hayes, vice president for product management."
"We are looking at this market. It's definitely important, and it's something we have a lot of interest in as well," Hayes said. "It's a new market for us, so we want to make sure we understand the market before we rush into a solution."
Spiraling health insurance costs are hammering all Americans, but early retirees are facing an extra squeeze. Their income is reduced but their medical expenses are going up and they increasingly end up paying more for coverage than either active workers or those eligible for Medicare.
That's because employers facing year after year of premium hikes are desperate for ways to cut their own costs, and they're taking aim at their early retiree pool. Retirees account for an average of 29 percent of the corporate medical bill for large employers, according to consulting firm Hewitt Associates, and retiree medical costs have risen steadily.
So companies are dropping or trimming the coverage they provide, charging a higher premium for early retirees, or making them pay a larger share of that cost. Such differences are allowed under federal law.
According to an annual survey by the Kaiser Family Foundation, just one-third of large employers offered retiree coverage in 2007, down from 66 percent in 1988. And only 5 percent of employers with fewer than 200 employees offered retiree insurance.
But that's fueling outrage among the retirees, who complain that they're being penalized after years of loyalty to their employer and argue that they shouldn't be treated differently. And that's putting pressure on the employers to do something.
"There's been interest in it when we talk to groups," Garrison said. "Some of them know it’ll be an issue for them in the coming year. Some of them don't have it as an issue now, but we want to be prepared for any issues that may arise for our groups. There's a growing gap that we're trying to address."
HealthNow is the only insurer locally to explore an early retiree plan, but the segment is garnering more attention nationwide because of the growing population of retired baby-boomers. While many retirees drop their individual policies once they're eligible for Medicare - which makes those plans less profitable for insurers because of the high medical expenses - the carriers are hoping the retirees will buy their Medicare Advantage and similar plans later.
"It's a new area," Garrison said. "It's something that every-one's probably looking at at this point."
Humana launched an individual policy geared to early retirees in spring 2007, while Aetna and AARP are now offering individual policies to AARP members aged 50 to 64. Well- Point also plans to introduce such a policy. But the premiums still tend to be high, especially if the retirees have medical problems.
Garrison said that once HealthNow comes up with a plan design, it will test it with employer groups and early retirees to see if the price and benefits are appealing. She said it's too early to determine what such a plan would cost.
One issue in terms of pricing the plan is complying with various state mandates about what health insurance plans must cover. Garrison said officials are trying to "work through those issues to find potential options that are viable, for the retiree and for the group."