Florida Blue: the blues of the Affordable Care Act A graduate of Colgate, Pat Geraghty spent 18 years with Prudential, before moving on to spend an additional 9 years with the Blue affiliate in New Jersey before being hired in 2008 as Chief Executive Officer at the Minnesota Blue. When former Florida Blue leader Robert Lufrano decided to retire in 2011, he advised Geraghty of the position. This was an opportunity Geraghty said he could not pass on; he was excited by the challenges the Florida location would bring, the "size, scope, complexity of the assignment" according to Mark Vogel. However, as Geraghty took the reins of Florida Blue, the health insurance industry was faced with an important issue that would change the landscape of the company. In 2010, the government passed the Patient Protection and Affordable Care Act law, otherwise known as Obamacare. This piece of legislation, which was championed by the president himself, mandates that all citizens be eligible for health insurance. The implementation of the ACA posed a threat to Florida Blue's overall performance in the market, as now there would be an increase in competition, and the lower insurance prices would mean that revenue streams would slow down. That being said, it was up to Geraghty to come up with a solution that would satisfy all parties involved and ensure that the company kept its position as a market leader. Florida Blue is Florida's largest and oldest healthcare provider notwithstanding the many competitors from both other local brands as well as national brands within the same industry. Florida Blue's top competitors are AETNA Inc., Humana Inc., and UnitedHealth Group Inc. According to Healthpayerintelligence (2016), the top firms in the healthcare industry today are United Healthcare with net sales in 2016 of $184.8 billion, Anthem with $89.1 billion, Aetna with $63.1 billion, Humana with $54.3 billion, and Cigna with $39.7 billion. Overall, Florida Blue is not ranked in the top ten insurance providers in general; its main competitors are all national providers, and Florida Blue's focus is only in Florida. It has been and remains a leader in Florida since 1944 due to the fact it continuously develops improved solutions that promote more affordable healthcare throughout Florida. Florida Blue has approximately 4 million healthcare members and serves 15.5 million people in 16 states through its affiliated companies. Unlike many other providers, Florida Blue is a not-for-profit, policyholder-owned, tax-paying mutual company. Although some of its competitors, such as Cigna, have been diversifying their business into overseas ventures, or like UnitedHealth and Aetna, who are into related areas such as health technology, Florida Blue remained committed to its core business, through insurance and new models of care. Florida Blue leads its competition in seeing the need to appeal directly to the people it is covering. Florida Blue has set up 18 retail stores as of today, where customers can come in, shop around, and have the ability to ask questions face to face as opposed to online or over the phone. You will be able to assess and further understand the amount of members the top companies have in Table 2.1. Florida Blue has over 310,216 statewide enrollments which was the second highest in 2014 just under Humana Medical Plan. It is a leader due to its reputation along with its principles and the path it follows. Florida Blue is constantly growing, and in 2014 it acquired the Diagnostic Clinic Medical Group located in Key Largo. It has also participated in private sector exchanges, which have been chosen by 90 percent of the full-time Florida employees of Darden Restaurants, owner of Olive Garden. Over the past two years, Florida Blue has updated its strategy to incorpinto business leads and in return, drive results. Florida Blue has empowered every employee to help drive brand awareness and speak on a personal level with his or her ever-growing online community. It has also been very successful in other areas of driving business such as a campaign it had with the Miami Heat, where Florida Blue offered personalized autographs and in just over a few hours over 2,900 fans received digigraphs, which had the capability to share on social media to help boost brand awareness and spread the brand image. Its campaigns and ability to drive business has not only helped it become the leader in Florida but to also remain the leader in such a competitive industry. The ACA requires individuals to have health insurance. The law also places stricter guidelines on insurance companies and helps to reduce out-of-pocket expenses. This new law also requires employers with employees working over 30 hours a week to be able to obtain insurance. The law also allows for patients with preexisting conditions to obtain insurance. More information regarding this new law can be found at Department of Health and Human Services (2015). The new ACA requires the following to be covered under its insurance plans: ambulatory patient services, emergency service, hospitalization, pregnancy and maternal care, mental health and substance disorders services, prescription drugs, rehabilitation services, laboratory work, preventive and wellness care as well as several pediatric care (Healthcare.gov, 2015). These services are considered essential benefits and insurance companies must cover these services according to the ACA. Having insurance is vital as medical expenses can be very costly. There is also a fee which consumers need to be aware of if they do not have any insurance. This fee is calculated based on household income and tax information. The ACA can help individuals to save money by purchasing a plan that would be cheaper than paying the fee for not having any insurance. Florida Blue, a Florida based insurance plan, offers many plans under the ACA. There are four plans to choose from: Bronze, Silver, Gold, and Platinum. Bronze covers 60 percent, Silver covers 70 percent, Gold covers 80 percent, and Platinum covers 90 percent of medical expenses (Blue Cross and Blue Shield Florida, 2015). Each plan is designed to cover the essential benefits, which is required by the ACA. However, monthly fees and out-of-pocket expenses vary depending on the plan and income level of the individual. In order to choose the plan that suits the individual the best it should be noted that the Bronze plan has the lowest monthly premiums making it the most affordable option; however, it does have significantly higher deductibles as well as the most out-of-pocket expenses. The Platinum plan has the highest monthly premium but has low deductibles as well as fewer out-of-pocket fees. These are important factors when deciding on an insurance policy. Florida Blue also offers an option called catastrophic health insurance plans, which have very low monthly premiums but have a very high deductible of $6,850. This may be a viable option for a healthy individual just needing coverage in case of an emergency and can be used to avoid the fee for not obtaining an insurance plan. Florida Blue plans can be purchased several ways. One way is through the general marketplace on the healthcare.gov website where multiple insurance carriers can be viewed. Insurance can also be purchased direct through a Florida Blue agent or in one of the 18 retail centers. Insurance plans also must be purchased during the open enrollment period, which is November 1, 2017-December 15, 2017. The Florida Blue bronze plan for a typical healthy 25-year-old costs $194 a month. This plan also has a deductible of $6,850 and an out-of-pocket maximum of $6,850. Once the deductible for this plan is met, there is no charge for emergency room care, generic prescriptions, doctors and specialists visits (Department of Health and Human Services, 2015). A Silver plan from Florida Blue has a monthly premium of $219, a deductible of $6,100 and an out-of-pocket expense maximum of $6,850. This plan has several co-payments, for an emergency room visit co-payment is $600 after the deductible is met. Generic prescription drugs costs $30 after the deductible is met and primary doctor visits cost $65 and specialists $95 after the deductible is met (Department of Health and Human Services, 2015). Florida Blue's Gold plan has a monthly premium of $290 and a deductible of $1,600 with a maximum out-of-pocket expense of $3,500. This plan has several co-payments, for an emergency room visit, generic drug coverage, and doctors including specialists' visits it is 10 percent of coinsurance after the deductible is met (Department of Health and Human Services, 2015). For a Platinum insurance plan it has a monthly premium of $574, a deductible of $800, and an out-of-pocket maximum of $2,500. There are several co-payments under this plan. for an emergency room visit it is 10 percent of coinsurance once the deductible is met, generic drugs are $10, primary doctors are $15, and specialists are $20 (Department of Health and Human Services, 2015). This is a sampling of the plans and deductibles Florida Blue offers and varies based upon age, income, and other factors. This information was obtained through the health insurance marketplace under the information of a generally healthy 25-year-old nonsmoking female. Consumers who want to learn more can visit Floridablue.com as well as healthcare.gov. The Affordable Care Act is a law that requires individuals to be covered by health insurance. The law places stricter guidelines on insurance companies and helps to reduce consumers' out-of-pocket expenses. As a result, insurance providers are coming up with new ways to earn a profit. The guidelines enforced directly affect the bottom line of insurance companies and in order to remain successful, plans need to do more than simply sell health insurance. In August 2013 Florida insurance regulators ruled to allow Florida Blue to restructure into a not-for-profit mutual holding organization (Kennedy, 2013). Florida Blue became public in this transition, but due to several conflicts of interest was not allowed to sell stock to outside investors. The company can, however, transfer assets to its mutual holding company. In September 2014 GuideWell launched as the parent brand over a family of brands, including Florida Blue. According to Chairman and CEO, Pat Geraghty, GuideWell has (Shedden, 2014) "a family of forward-thinking companies focused on helping people and communities achieve better health." In January 2015 Florida Blue reportedly laid off 150 employees throughout the state. According to Paul Kluding, Senior Director of Public Relations at Florida Blue, "The healthcare industry is undergoing unprecedented change. In order for organizations to adapt, they must tightly manage costs and look for effective solutions that continue to provide customers with the most affordable healthcare choices possible" (Elmore, 2015). This change in the healthcare industry is the Affordable Care Act. The ACA law rules for all citizens to be eligible for health insurance. This transformation in healthcare has allowed low-income families to qualify for subsidies and earn assistance on healthcare plans. These are "highly subsidized" customers. Florida Blue has altered its marketing strategies to target these highly subsidized customers. The company is focusing on grassroots marketing initiatives that target the highly subsidized customer and the Hispanic community. As a result, marketing efforts have shifted from upper-class families to the lower class and highly subsidized, with a strong push towards Hispanics specifically in Miami, Florida. GuideWell has partnered with a Colombian-based health clinic, Sanitas, to open three initial clinics in Miami, with plans to expand throughout the U.S. inother Hispanic markets. The locations are in Doral, Kendall, and Miami Lakes. While primarily targeting customers seeking care through the ACA individual market, the clinics accept Florida Blue members or cash payments. According to GuideWell Pat Geraghty had to decide what action Florida Blue would take in response to an important issue that would change the landscape of the organization. The ACA posed a threat to Florida Blue's overall performance in the market, and Geraghty's solution to this threat was an organizational restructuring placing GuideWell as the mutual holding company over the family of brands, which included Florida Blue. The restructuring has allowed Florida Blue to maintain its positioning as the market leader and expand its products and services outside of the original scope of the health insurance provider

Instructions: Follow the below format in solving case analysis:

I. Problem

II. Objectives

III. Areas of Consideration (in SWOT analysis format)

IV. Alternative Course of Action

V. Recommendation

VI. Plan of Action

VII. Potential Problems

VIII. Contingent Plan of Action