Florida Blue CEO on rising costs and attracting younger consumers
When a company commands 30 percent of an industry’s market, that company is a keen observer and a key player when the industry is going through a transition.
Pat Geraghty, CEO and board chairman of Florida Blue, which has 30 percent of the health insurance market in Florida, spoke Monday to the Rotary Club of Jacksonville. He touched on topics from the challenges still facing the federal Affordable Care Act to how his company is marketing its products in retail stores.
He said there is no doubt the rollout of the Affordable Care Act was, from a technological standpoint a “disaster.”
One of the major controversies associated with the plan to insure everyone is that some people will receive subsidies to help them pay their insurance premiums.
“For a number of people, it’s the only way they will be able to access care,” Geraghty said.
The subsidies will not change the cost of health care, only the cost of insurance for certain people. Health care costs can be controlled by focusing on prevention and wellness rather than focusing on treating a patient who already is suffering from illness or disease, he said.
Another issue is the relatively small number of young people who have enrolled to date in the Affordable Care Act. In order for the system to work, younger people with fewer health issues must pay into the program to cover the health care costs of older insured people.
“Young people believe they are invincible. It’s very hard to motivate them to purchase insurance,” said Geraghty.
The act has led to increased costs for health care. Geraghty said Florida Blue will pay this year an additional $132 million in what he called “new tax” and the company has no choice but to pass the cost along to its policyholders.
“Medical device manufacturers are paying $20 billion in new tax. Pharmaceutical companies are paying $80 billion in new tax and they are passing it along. The new taxes are pushing prices up,” he said.
Florida Blue has increased its share of Medicare business. The company will pay $108 billion in claims this year in 12 states, Washington, D.C., Puerto Rico and the U.S. Virgin Islands.
“We are the largest contractor for the federal government,” Geraghty said.
Florida Blue has opened 18 retail stores in Florida, including one in Jacksonville at the St. Johns Town Center. Geraghty said going into direct retail sales to consumers was seen by some as an unconventional move for a health insurance provider, but it is what the market demands in terms of face-to-face interaction.
Florida Blue plans to open another retail store in the new YMCA along Riverside Avenue, part of a long-term commitment to offering health-care solutions, he said.
“Why did Apple build Apple Stores? Our product is more important and more expensive than technology. It’s about the customer experience,” Geraghty said. “You’ve got to make it fun. People want to be engaged, particularly young people.”