Bob Hayes, CFO of the Melloy Nissan car dealership in Albuquerque, had had it with having to play the negotiating game for health insurance for the firm’s employees.
After two proposed 20 percent premium increases over three years from Blue Cross and Blue Shield of New Mexico, Hayes decided to listen when representatives of Lovelace Health Plan came knocking.
On June 1, 435 of Melloy’s employees and their dependents switched to the Lovelace Health Plan.
“Lovelace wanted our business and cared about us,” Hayes said, offering one reason he switched to Lovelace after more than a dozen years with Blue Cross.
Melloy isn’t alone in switching to Lovelace. The health plan, which insures more than 250,000, has added 10,000 new members in 2012, and is on schedule to double last year’s growth rate, said Doug Gullino, Lovelace’s vice president of commercial sales and service.
Over the past two years, Lovelace’s membership has grown by 10 percent, and the health plan will add 1,500 new members in southeastern New Mexico on July 1, Gullino added. In addition, the insurer’s membership retention rate is high, at 96 percent for groups and 94 percent for members, he added.
Lovelace Health System President and CEO Ron Stern said the health plan is growing because it offers quality, service and affordable rates. “We focus on quality, and our metrics are very favorable when compared to theirs,” Stern said.
For Hayes, the decision to switch health plans was both difficult and easy. Melloy had been with Blue Cross for years, and in many ways, Hayes had a good working relationship with the insurer’s employees.
But three years ago, Blue Cross raised Melloy’s premiums by 20 percent. Melloy sought bids from other insurers, including Lovelace and the Presbyterian Health Plan, Hayes explained. He decided to stay with Blue Cross after he was able to negotiate the premium hike down to 8 percent.
But this year, Melloy saw another 20 percent rate hike from Blue Cross. That increase would have added $200,000 to the $1 million Melloy was paying for its employees’ health insurance.
“I just said ‘I’m not going to play this game anymore,’” Hayes said.
Having spoken to Lovelace representatives three years ago, Hayes contacted them again. Lovelace was able to offer Melloy rates 5 percent below what the firm was paying for coverage from Blue Cross, he said.
Donna Norris, a health insurance consultant who helped Melloy find a new carrier, said Lovelace offered more than lower premiums.
Lovelace set up meetings with Hayes and Norris with the insurance underwriters, or, as Hayes calls them, the number crunchers. Hayes said he never met his former insurer’s underwriters.
Lovelace Health Plan CEO Ben Slocum said the company is looking to add new members in southeastern New Mexico, where its parent company, Lovelace Health System, recently bought the 26-bed Roswell Regional Hospital.
The health plan is offering employers plans with specific copayments instead of having their employees pay a percentage of the cost of a doctor’s visit or medical procedure, Slocum explained.
Hayes had some advice for employers that want to lower health insurance premiums for their employees: provide a basic plan for free.
The vast majority of Melloy’s more than 300 employees are under 40 years of age. Most of them would not buy insurance if they had to pay for it, Hayes said. By giving those younger employees a basic plan, Melloy has a much larger employer group. As a result, the older employees wind up paying less for their health insurance.
“If we didn’t offer that free plan and have those additional employees in the group, our premiums would be 20 to 40 percent higher,” Hayes said. Melloy employees who opt for more extensive coverage pay $107 a month in premiums, Hayes said.
(Left) Reporter Dennis Domrzalski interviews Lovelace Health System CEO Ron Stern (right), and (rear, left to right) Lovelace Health Plan CEO Ben Slocum, Vice President Doug Gullino and Lovelace Health System V.P. and CFO Stephen Forney.