A business unit of Orange-based Word & Brown Cos. has teamed up with a health insurance behemoth as a way to fuel growth.
Word & Brown provides insurance services to nearly 60,000 companies through more than 55,000 brokers, with nearly 6.5 million employees eligible for coverage.
The privately held company has about 700 local workers and was founded in 1985. It doesn’t disclose revenue figures.
“Ninety-nine percent of everything we do is through brokers. We’re a tool for the broker,” said Ron Goldstein, chief executive of Word & Brown business unit Choice Administrators, which operates the company’s CaliforniaChoice private health insurance exchange.
CaliforniaChoice serves more than 10,000 businesses and 150,000 employees.
It “[does] everything a carrier does except pay claims” for its clients, Goldstein said.
The exchange expanded its offerings this summer when it added 12 benefit plans and three provider networks from Cypress-based UnitedHealthcare of California, a unit of Minneapolis-based UnitedHealth Group Inc.
UnitedHealthcare of California, which has over 216,000 PPO and HMO members in Orange County and more than 3.2 million members statewide (see story, page 16) “looks forward to working with CaliforniaChoice” through the exchange, Brandon Cuevas, the unit’s chief executive, said in a news release.
CaliforniaChoice sought UnitedHealthcare to join its offerings because the latter was “willing to bring what we call a full-network HMO to the table, which basically says all the hospitals, all the docs, all your key networks will be covered,” Goldstein said.
“That was a big deal to us,” he said, adding that his unit and UnitedHealth had made on-and-off contact over the past couple of years.
UnitedHealth “just reopened the door” to CaliforniaChoice after seeing other plans’ positive experience with the exchange, he said.
CaliforniaChoice now has seven participating health insurers, 17 provider networks, and more than 55 health maintenance organization, preferred provider organization, and other types of available health plans with the UnitedHealthcare offering, which took effect Aug. 1.
Aetna Inc., Anthem Blue Cross, Health Net Inc. and Kaiser Permanente are among the larger participating health plans in CaliforniaChoice. There are other more regional plans, including Sharp Health Plan in San Diego and Western Health Advantage in Northern California.
“United is a big player in California. Our brokers have just gone crazy with it,” Goldstein said.
CaliforniaChoice has operated since 1996 and is a fully insured private health insurance exchange.
Health insurance exchanges are designed to help individuals and businesses with up to 50 workers to shop, compare and enroll in healthcare plans.
Goldstein said CaliforniaChoice “is a little bit different than the shop.”
The “shop” was a reference to Covered California, the state-run insurance exchange created through federal healthcare reform.
“We have a single bill, so on a seven-[employee] group, each employee can have a different health carrier, a different benefit [from colleagues], and we aggregate that into one bill for the employer,” Goldstein said.
CaliforniaChoice attracts businesses with more employees than those in Covered California, he said.
He noted that the exchange doesn’t offer tax credits as part of healthcare reform.
“That tax credit is only for [Covered California]. Covered California is getting a lot of those ma-and-pop groups, those two-, three-, four-[employee] groups that are looking for a tax credit,” Goldstein said.
CaliforniaChoice instead draws employers that don’t want to break up their groups in terms of their multicarrier insurance arrangements.
“They don’t want to see them go into Covered Cal,” Goldstein said.
CaliforniaChoice’s biggest challenge, according to Goldstein, is that “regulations ebb and flow,” making it hard to plan processes.
“You get a regulation that’s approved, and you start software development in a direction, and a month and a half later, the direction changes,” he said. “Our software development has been very choppy.”
Goldstein said healthcare reform has affected CaliforniaChoice, even though it’s a private exchange.
“The market was a little bit harder [prior to reform], because our rates were a little bit higher than market rates,” Goldstein said, adding that healthcare reform forced the exchange to provide lower rates for competitive reasons.
CaliforniaChoice’s pricing now “is basically the same … as Blue Cross direct, as Kaiser direct, [and] as Health Net direct,” he said.
The exchange is also looking at accountable care organizations as a growth avenue, Goldstein said. Those occur when medical groups or hospitals link to create their own healthcare programs that serve specific areas. The organizations seek regulatory licensing, and the entity that sets them up takes on the risk as an insurance carrier would.
Several such organizations have emerged in OC in recent years, including a recently announced collaboration between St. Joseph Hoag Health in Irvine and Children’s Hospital of Orange County, which has facilities in Orange and at Mission Hospital in Mission Viejo.
CaliforniaChoice might consider adding an accountable care organization to its lineup for several reasons, including the possibility of having lower rates than a traditional HMO or PPO carrier.
Word & Brown’s Choice Administrators unit develops and administers health insurance exchanges. Besides California Choice, other products include CaliforniaChoice 51+ for larger businesses; Kaiser Permanente Choice Solution; H.S.A. California; Contractor’s Choice; and Choice Builder, which it bills as the nation’s “first dental and ancillary exchange.”
