Walgreens: One-Stop Shopping for Healthcare Insurance

The nation’s largest drugstore chain is planning to begin selling health insurance this fall.  Walgreens, which operates 7,742 drugstores in all 50 states, the District of Columbia and Puerto Rico, will sell health insurance products with different price ranges and coverage levels nationally through a private health insurance exchange.

According to Walgreens officials, “As always, we’re looking at a number of options in light of healthcare reform as we continue to seek ways to help our customers better navigate today’s healthcare system.”  Health reform mandates the creation of federal and state-funded public health insurance exchanges by 2014 that will offer subsidized insurance for people who lack insurance. Multiple companies, many not typically associated with health insurance, are also expected to jump into the embryonic but lucrative market for health insurance exchanges — estimated to be worth billions of dollars — prior to 2014.  These include retailers, financial services providers and a major payroll processer that are actively planning to create their own private health insurance exchanges.  Walgreens neither confirmed nor denied the report,  but it’s expected that the insurance plans will be available online, in-store or via call centers and will be branded by national insurers in some instances.  Walgreens currently offers flu shots and vaccinations at its “take care clinics” so this new move is seen as a bid to become a one-stop shop for healthcare needs.

The investment banking firm TripleTree,  which focuses on the healthcare and technology market, estimates that between 2014 and 2019, as many as 36 million Americans will buy their health insurance from exchanges.  “For retailers, (creating a private insurance exchange) is a way to generate more revenue from a new business,” Chris Hoffman, TripleTree’s chief marketing officer, said.  “Those companies that get their exchanges up and running before 2014 could also succeed in stealing customers away from the public exchanges.”.

Hoffman pointed out one crucial distinction between public and private health insurance exchanges.  Consumers who qualify for government subsidies can participate only in public exchanges, and not private exchanges.  Still, Hoffman said that private exchanges will attempt to stay competitive with public exchanges by offering other incentives to join, such as loyalty programs that tie in discounts and bundling other types of insurance like life insurance along with their health insurance products.

By entering into a partnership with some of the nation’s biggest health insurers, selling health insurance is a natural evolution in Walgreens’ process of becoming a one-stop shopping destination for all healthcare needs.  Some forms of insurance will be branded by national insurers and others will be “private label” insurance products sold through Walgreens’ exchange.

Writing on the bizmology website, Alexandra Biesada says that “I wouldn’t be surprised if it’s true.  Walgreen has rushed to fill gaps in our nation’s fractured healthcare system, opening hundreds of in-store Take Care Clinics, worksite healthcare centers and by offering a slew of healthcare services, including immunizations and counseling for chronic conditions, such as diabetes.  It also provides products and services to pharmacy patients and prescription drug and medical plans through its Walgreens Health Services unit.  Already a leader in healthcare services, offering health insurance is a logical next step for Walgreen.  With the ranks of the uninsured and underinsured swelling, consumers are being steered to health insurance exchanges under the Patient Protection and Affordable Care Act (aka the healthcare reform bill) passed into law in March 2010.  In addition to the creation of federal and state-sponsored health insurance exchanges, the private sector, including retailers such as Walgreen, is expected to enter the market.  While only consumers enrolled in government-sponsored exchanges are eligible for subsidies, privately-sponsored exchanges could still be competitive by offering subscribers other incentives to join their network.  Some retailers, Sam’s Club comes to mind, already offer select customer groups services, including group health insurance.  So the idea of buying coverage from a retailer, rather than through an employer or broker, isn’t unprecedented.  Walgreen has moved quickly to capitalize on the transformation of our healthcare system and is looking for growth opportunities beyond its vast network of retail stores.”

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