NU Online News Service, April 26, 4:45 p.m. – HealthMarket Inc. is trying to solve one of the riddles facing the defined-contribution health insurance industry by buying its own fully licensed insurance carrier.
The Norwalk, Conn., company has already received regulatory approval to acquire American Travelers Assurance Company and it hopes to complete the deal May 1.
American Travelers has no operations or book of business, but it does have a license to write insurance in 30 states.
Once HealthMarket owns American Travelers, it will be able to offer high-end consumer health information services, personal employee “care accounts” for everyday medical expenses, and catastrophic health insurance all on its own.
HealthMarket will be one of just a few companies in the defined-contribution health market that’s able to provide the catastrophic coverage.
A traditional insurer has been helping HealthMarket write its coverage up till now, and others definitely seem to be interested in working with defined-contribution health companies, according to Lindsay Resnick, HealthMarket’s chief marketing officer.
But owning an insurance company outright “allows us to control our own destiny,” Resnick says. “It had always been part of the plan.”
In the area of broker compensation, for example, rates and policies might be similar, but HealthMarket should now have more flexibility, Resnick says.
Steve Wiggins, the founder of Oxford Health Plans Inc., Norwalk, Conn., founded HealthMarket in 2000. He intended mainly to set up a company that would provide health care quality and price information through the Web.
The company still prides itself on the extensive provider price information it gives its members, but it began setting up complete defined-contribution health coverage programs in late 2001, Resnick says. The company has tried to set itself apart from many of its competitors by going after small and midsize businesses rather than big businesses.