I recently spoke to a manager from Blue Cross Blue Shield (BCBS) who stated his company has concluded that the Affordable Care Act (ACA) is here to stay. They specifically believe the minimum loss ratio requirement is with us for the foreseeable future, therefore, the probability of making a profit in the major medical business was very small. BCBS management has decided to ramp up their secondary company, which now sells group term life only, and begin marketing ancillary products as a method to increase company profits.
Following passage of the ACA, I have observed several of the largest medical insurers in the country come to the same conclusion. They have begun to purchase and manage various side ventures which operate around major medical plans to produce profits; wellness plans, nurse advice lines, and Teladoc plans, just to name a few. Other major medical carriers have moved into the Medicare Supplement and Medicare Advantage space. But this is the first time I actually heard someone in management of a large insurance company discuss plans to look at ancillary insurance products as the profit maker of the future.
As a marketer of ancillary products for the last 30 years, this causes me excitement and concern at the same time. I am concerned the market may become saturated with ancillary products from carriers tied to major medical. On the other hand, I am excited that those same companies will need product expertise and administration systems to make it happen.
No matter how you view it, this is a major shift in the market for ancillary products. Brokers should follow these developments closely to ensure they are aligned with companies who can take advantage of this increased activity in the ancillary products market. Many partnerships and strategic alliances will be made in the next few years.
Stand-alone dental and vision carriers, as well as carriers who sell cancer, accident, short term disability, and hospital indemnity products, should contact medical carriers in their area and discuss their plans for this new growing market. No one wants to be left behind.