The health care law has altered the competitive landscape by encouraging a new wave of competitors and creating a marketplace that puts a much sharper focus on price, because individuals can so easily compare premiums on a single Web site. About a quarter of the insurers competing are new to the market. These newcomers, including insurers that had served the low-income Medicaid market, and plans offered directly by large hospital systems often seek to offer the least expensive policies.
The Blues plans, by exploiting their size and longstanding presence in a market, are also emerging as low-cost alternatives. They are frequently among the least expensive policies being offered, according to early analysis by Avalere Health, a Washington research firm, of the premiums being made public by the states and federal government.
By primarily catering to individuals and small businesses, they remain a staple on the new exchanges The nation’s Blue Cross and Blue Shield plans have typically been the largest insurers providing coverage.
Originally created by hospitals and doctors to help patients pay for medical care, the nonprofit Blue Cross and Blue Shield plans do not have to generate a return to investors, so they say they can afford to offer policies that may not yield much profit.
WellPoint, which became one of the nation’s largest insurers by combining more than a dozen Blue Cross plans into a profit-making company, is also actively participating in the exchanges in all 14 states where it operates. “We expect to be a strong competitor in most regions because our brand and local market experience are meaningful differentiating factors,” the company’s chief executive, Joseph R. Swedish, recently told investors.
“The Blues are very well positioned,” said Dan Mendelson, the chief executive of Avalere. “They have great name recognition. They have a very strong understanding of the local market because they have been operating there forever.”
Industry analysts say the Blue Cross plans are frequently able to negotiate lower prices for medical care because they have so many customers to offer to hospitals and doctors. And despite the uncertainty over how many people will sign up and how many will have expensive medical conditions, they may also be more comfortable in their estimates about how much it will cost to offer coverage under the law than some of their new competitors.
Blues plans are trusting in their brand recognition and wide reach across exchanges to boost enrollment numbers, the New York Times reported.