Medica plan may be glimpse of future

Medica is launching a new plan for businesses that it says will help them gain more control of health care costs, while giving employees more say in designing their insurance plans -- even as they're picking up more of the tab.

The Minnetonka-based insurer's plan may provide a glimpse into how new health insurance exchanges could work, well ahead of the 2014 federal mandate.

The health care reform law requires states to offer marketplaces where people can shop for plans from different providers. Medica's program is like a private exchange.

Called "My Plan," the employer sets aside a specific dollar amount for each employee to use for health care. Employees then go online and decide how they want to spend it by choosing among 20 Medica plans.

The program will be available on July 1 to businesses with at least 51 workers.

"There's a sweet spot in the small- to mid-range employers that will find this very attractive," said David Delahanty of the human resources consulting firm Towers Watson in Minneapolis. "For the employee, there's more choice. If you're single and you're healthy or if you're a young family with children, you can find something within these 20 choices that will appeal to you."

Medica has partnered with Minneapolis-based Bloom Health, which has developed an online tool that assesses a worker's financial situation, health care needs and appetite for risk, and helps narrow down the choices that best fit.

This is the first time Bloom Health has adopted its platform for a single insurer in Minnesota, though it has done so for plans in other states.

'Becoming smarter shoppers'

Bloom Health CEO Abir Sen compares it to Expedia or Travelocity. The online tool sorts through Medica's 20 options and comes back with two or three options that are best for a particular employee.

Sen said that when workers see how much gets put into their account by their employers and what portion they'll have to kick in for coverage, they make different choices. Individuals are choosing a $3,000 deductible on average, while the most common family plan at Bloom Health has a deductible of $6,000.

"It goes back to the hypothesis that people spend their own money differently than when they spend other people's money," Sen said. "They're becoming smarter shoppers of care. Anecdotally, some of our employers are saying people are starting to pay more attention to preventive care and those sorts of things because now they're more on the hook for their own health. It's early yet, but it's very encouraging."

"Employers are making decisions behind the scenes about the level of benefit and the kind of contribution they'll make," he said. "Maybe they'll lower their benefits or find ways to lower cost, or you as an employee take on more. 'My Plan' offers a way for employers to control costs, but to give me as an employee more flexibility and choice."

Simeon Schindelman, Medica's senior vice president of commercial markets, said the company spent about a year working on the program, based on feedback from some of its 200 brokers as well as businesses.

First of many innovations

Although companies of various sizes and industries have shown interest, no one has officially signed on.

But Delahanty of Towers Watson predicts it's the first of many such innovations, as the reform law rolls out and companies think more about health insurance exchanges.

"Medica might be one of the participants, but Blue Cross, HealthPartners, UCare, they might all be competing on these exchanges. And some of the larger employers might have an opportunity to go and put their people in them as well."