Blue Cross and Medica join Bloom Health's online insurance market

In a sign that online exchanges are becoming an increasingly popular way to sell health insurance, the state's two largest insurers will join a single private exchange and compete head to head for employers' business.

Blue Cross and Blue Shield of Minnesota and Medica plan to sell a suite of health plans through an online marketplace developed by Minneapolis-based Bloom Health, in what was described Tuesday as a first-of-its-kind arrangement in the state.

"They've got to compete very aggressively," said Bloom Health CEO Simeon Schindelman. "It's a winner-take-all" scenario.

The online platform will be used mostly by agents and brokers in the year ahead, and is available only to businesses with more than 50 employees. It also will offer additional benefits such as life and disability insurance, dental and vision coverage, and vacation savings accounts.

Medica was the first insurer in the state to work with Bloom Health to create an exchange exclusively for businesses. Launched in 2011, its "My Plan by Medica" offering for businesses became the fastest-growing product offered in the state, and is now used by more than 30,000 employees and family members, according to Bloom Health.

Blue Cross and Blue Shield of Minnesota, the state's biggest insurer, decided to create what it calls a "benefits hub," because of Bloom's proven track record and simple interface, said David Corkum, Blue Cross' senior vice president of commercial markets.

The advantage of the exchange, he said, is that employees can choose among a much wider variety of health plans and pick the one that fits their family's health needs and pocketbooks. Meanwhile, companies can still craft benefit packages to manage their costs.

Private exchanges existed before federal health reform efforts, but have been gaining steam in the past year as the federal government has rolled out public exchanges that serve individuals and small businesses.

Bloom Health was among the first to come to market with an easy-to-understand questionnaire to help guide employees through the maze of health insurance options, and to help them narrow down a list of choices based on the best fit.

The company launched as a health IT start-up in Minneapolis in 2009, now is owned by a consortium of insurers including WellPoint Inc., and Blue Cross Blue Shield nonprofits not based in Minnesota.

Many of the national benefits companies, such as Mercer, Aon Hewitt and Towers Watson, also have created their own private exchanges for businesses, but this is the first year Minnesota insurers have participated.

Still, the vast majority of employers aren't yet comfortable with the concept of exchanges, and end up making a handful of choices for their workers.

"The train has left station for 2015, "he said, "but we're anticipating it being a huge issue for 2016. A lot of employers will finally decide to make the move and it's going to be en masse. You'll hear one big retailer will go, and then one big manufacturer will go and the whole industry is going to look at it more seriously."