Health Plans Step Into Retail Operations

If Blue Shield of California has its way, the grocery lists of many of its San Francisco members will now include a health insurance check-up as well as eggs, orange juice, and milk.

On Monday the Blues company opened an insurance store inside a Lucky Supermarket. This is the first bricks-and-mortar facility for the health insurer, which usually connects with its members via the Internet and the telephone.

Blue Shield joins a handful of health insurers across the country that have opened retail stores in recent years, including Blue Cross Blue Shield of Florida, Highmark Blue Cross Blue Shield in Pittsburgh,  Blue Cross Blue Shield of South Carolina, and Humana.

The retail move is in response to several market forces: high unemployment, the decline in employer-sponsored insurance benefits, and healthcare reform. Many of the more than 14 million unemployed are uninsured, which has created a market for individual policies.

And fewer employers are offering health insurance. Sixty percent of employers offered health benefits in 2011, down from 69% in 2010, according to the Kaiser Family Foundation. Meanwhile, healthcare reform will require millions of the uninsured to have health insurance beginning in 2014.

Doug Biehn, vice president for corporate marketing at Blue Shield, explains that the post-healthcare reform environment will require health insurers to differentiate themselves in new ways. "We think healthcare products will be fairly synonymous across competitors and that health insurers will need to think about ways to differentiate themselves beyond price and medical benefit design. We think the opportunities this store will offer for face-to-face interaction will help differentiate us from competitors and make us more attractive to customers."