November 26, 2013
By Edmund F. Haislmaier
Corporate advertising often reflects the evolving zeitgeist. Three new ads that poke fun at the Obamacare rollout fiasco do just that. But what makes them particularly noteworthy is that they are from a health insurer.
Both the source and the message are significant on several counts.
First off, the insurer, Wellmark, is the parent company of the Iowa and South Dakota Blue Cross plans. It is the largest insurer in both states. Wellmark currently accounts for 78 percent of the individual health-insurance market and 75 percent of the employer group market in Iowa. In South Dakota it has 73 percent of the individual market and 50 percent of the group market. So, this is not some marginal player, or an upstart trying to attract attention. Rather, this is an “establishment” company talking.
Second, of the 62 Blue Cross Blue Shield licensees, only three are not participating in the Obamacare exchanges in 2014, and Wellmark’s Iowa and South Dakota subsidiaries are two of those three. (The third company is Blue Cross Blue Shield of Mississippi.) Seasoned market analysts know that it is always a good idea to pay attention to what the “contrarians” are up to.
Back in mid August, an attendee at a conference of Iowa health-insurance agents told me that Wellmark had opted to stay out of the exchanges because the company did not expect—based on the way things were then going—that the exchanges would be “a positive customer experience.” Translation: Apparently Wellmark did not want to risk tarnishing its brand by associating with what was shaping up to be a disaster.
Today, I bet you would be hard pressed to find anyone in Wellmark’s corporate headquarters who doesn’t think that their company made the right call. I’d also be willing to bet that there are plenty of people in the offices of the 59 Blue Cross plans that did join the exchanges who are wishing they had gone in Wellmark’s direction.
Third, Wellmark still says that it intends to offer coverage on the exchanges starting in 2015. Watch in the coming months to see whether Wellmark revises that projection, as it will be an important “tell” for how Obamacare implementation is progressing. If Wellmark sticks with its current position beyond the next six months or so, it will indicate that the Obama administration is making solid progress in fixing the operational issues that created the rollout debacle. In that case, I expect a number of the other carriers that took a pass on the exchanges in the first year—or, like Aetna, United and Cigna, are only “test driving” the exchanges in a few states—will also go into the exchanges in 2015. Conversely, if Wellmark changes its mind and decides to remain outside, expect to see a number of insurers that signed up this year drop out of the exchanges next year.
At this point, by running ads that humorously contrast the malfunctioning new exchanges with its own reliability, Wellmark nicely positions itself for the possibility that it might need to abandon its plan to join the exchanges next year if Obamacare continues to falter. Furthermore, as a “mutual” insurance company owned by its policyholders (who elect its board), Wellmark is less susceptible than most other insurers to political pressure.
All of this brings me to another, important, point that is almost entirely missed by commentators—across the political spectrum—when assessing Obamacare. Namely, that “the insurers” are not some monolith responding in unison to Obamacare. As I detail in a recent paper, there is considerable variation in how insurers have reacted to Obamacare, and there are some important insights to be gleaned from analyzing insurers’ exchange-participation decisions.
One of those insights, illustrated by Wellmark’s new ads, is that there continues to be a substantial, and viable, market for private health insurance outside of the exchanges. Indeed, if one clicks through the first three ads on Wellmark’s YouTube channel, the next six, more serious, videos elaborate on some of the themes that we will likely see from other insurers that opted not to participate in the exchanges.
In those 30–90 second videos, company executives explain how Wellmark offers plans outside the exchanges that are competitively priced and easy to purchase, how while their plans aren’t subsidized their enrollment system actually works and they don’t ask intrusive questions about an applicant’s income, and how the company is not canceling coverage but has instead offered to renew the existing policies of its individual and group customers through 2014.
In sum, if you want to know how the market is responding to Obamacare, Wellmark is a key insurer to watch.
- Ed Haislmaier is a senior research fellow in the Heritage Foundation’s Center for Health Policy Studies.
Originally appeared in National Review Online.
Edmund F. Haislmaier
Senior Research Fellow, Health Policy Studies
Read More >>
Request an interview >>
Please complete the following form to request an interview with a Heritage expert.
Please note that all fields must be completed.
Heritage's daily Morning Bell e-mail keeps you updated on the ongoing policy battles in Washington and around the country.
The subscription is free and delivers you the latest conservative policy perspectives on the news each weekday--straight from Heritage experts.
The Morning Bell is your daily wake-up call offering a fresh, conservative analysis of the news.
More than 200,000 Americans rely on Heritage's Morning Bell to stay up to date on the policy battles that affect them.
Rush Limbaugh says "The Heritage Foundation's Morning Bell is just terrific!"
Rep. Peter Roskam (R-IL) says it's "a great way to start the day for any conservative who wants to get America back on track."
Sign up to start your free subscription today!
The Heritage Foundation is the nation’s most broadly supported public policy research institute, with hundreds of thousands of individual, foundation and corporate donors. Heritage, founded in February 1973, has a staff of 275 and an annual expense budget of $82.4 million.
Our mission is to formulate and promote conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong national defense. Read More
© 2014, The Heritage Foundation Conservative policy research since 1973