Mega changes on the horizon: a Texas life and health insurer regroups with a new name and a new objective: lowering the high cost of health care.

When the life and health insurer formerly known as UICI officially changed its name in April to the more descriptive HealthMarkets, change began to happen almost immediately.

President and Chief Executive Officer William J. Gedwed saw it first hand a few days later, while sporting his new HealthMarkets logo golf shirt at a store on a "honey do" shopping run.

"As I was walking through Home Depot, an employee saw the logo and asked if I worked for HealthMarkets," Gedwed said. "He said, 'Is that a health insurance company? I'm in need of health insurance.'"

The worker's group employer plan did not kick in until after six months of employment, he explained. Gedwed gave him a contact number.

"So we were able to provide him with information," Gedwed said. "Had I walked around the halls of Home Depot with my UICI shirt, he would have never made the connection."

That's one reason UICI made the transition to HealthMarkets: instant name recognition.

"We wanted to establish a new name that communicated to the public exactly what we do: That we service health markets," Gedwed said. "As we started out of the gate, [we wanted] to make sure the world knew who we are, what we did and who our customer base was."

But it's not the only reason. Because while the former UICI serviced independent small businesses and businesspeople, just as HealthMarkets does now, the difference is in how it's all done. The real change has been a marriage of sales expertise and modern technology dedicated to providing price transparency to consumers, and, therefore, helping them keep their own--and eventually, the nation's--health-care costs at reasonable rates.

"We really have taken a tremendous change in direction for our organization. From a business standpoint, we've really focused on our core assets and core knowledge base, and we're excited about what's going on today," Gedwed said. HealthMarkets "transformed from a public company to a private one; what that brings to us is, we've got a lot of good things going on."

HealthMarkets, based in North Richland Hills, Texas, today offers an assortment of health-care insurance products ranging from major comprehensive to indemnity-based policies for low-needs customers. According to the company Web site, HealthMarkets' 2005 revenues were $ 2.1 million.

A recent nationwide ad campaign was an effort to launch the brand and let folks know what they do and "why we are a valuable service in this industry," Gedwed said.

HealthMarkets' Consumer Guided Health Insurance, designed to afford price transparency to plan members, "is not an attempt to communicate to our customer base which doctors are the cheapest doctors. Our goal is really focused on our consumer, to reduce their medical spend, as we call it," Gedwed said. "Here are your products, and here are the benefits that your products provide you, and if you go to these doctors, you won't have any out-of-pocket expense."

It's also part of a focus to help reduce health-care rates nationwide.

"Someday we'll shop for health care the way we shop for groceries," said John Goodman, president and founder of the National Center for Policy Analysis in Dallas. Goodman and Gedwed both testified in March before the House Energy and Commerce Subcommittee on Health. "In order for patients to become savvy shoppers in the medical marketplace," Goodman testified, "they must be able to discover what things cost and to compare prices as well as value."

Price Check

HealthMarkets' price transparency tools are designed to stimulate competition in the marketplace and encourage pricing conversations between providers and patients, Gedwed said. The cost of an MR/according to HealthMarkets' tools ranges from $400 to $1,400. "Consumers can make the election."

Costs for such noncovered procedures as cosmetic surgery and Lasik eye surgery have dropped nationwide because consumers are choosing such procedures based on price and value, he said.

"Monitor those and see how prices have dropped over the last 10 years. That is directly related to the fact that consumers have to spend their own dollars," Gedwed said. "They take an active role in competing to drive down those costs. Providers have to become more innovative."

UICI was basically "a one-trick pony" when Gedwed came on board in July 2003, he said. The company provided indemnity-based policies for its base customer, the independent small business person. But an assessment of the customer base revealed an array of customers: some who could afford a variety of products and others who could not, he said. The result was a plan to expand the portfolio of products that agents sold to that customer base.

The goal was to add the company's new Consumer Guided Health Insurance plans "to the quiver of our agents as additional arrows, so when they went to our customer, the customer is making the decision as to what they can afford and what they can add to the plan," Gedwed said.

Back to Its Roots

HealthMarkets was established in 1985 by Ronald L. Jensen as United Insurance Cos. Inc. The company became publicly traded in 1986. During the 1990s, the company transformed into a diversified financial services concern; the company changed its name in 1996 to simply UICI to reflect its broadened offerings.

In 2003 when Gedwed took the helm, "one of the things I really focused our company on was to get back to our roots," he said. It seemed the entire management team, including Gedwed himself, he said, "had gotten into business they really didn't understand."

"The bandwidth in this organization was stretched to its limits," Gedwed explained. "One of the reasons why it ran into issues with regulators is that people weren't as focused on noninsurance business."

Last year, the National Association of Insurance Commissioners reviewed the operations of three UICI subsidiaries: Mega Life & Health Insurance Co., Mid-West National Life Insurance Company of Tennessee and Chesapeake Life Insurance Co. Mega also had been barred in Washington state from writing new business a month earlier because its policies violated state law. The NAIC scrutinized UICI's market conduct in 24 states, with a concentration on the Washington and Alaska markets.

UICI sold off all of its noninsurance operations to focus on its core business: health insurance and affordable health coverage.

"When we did that, one of the things I wanted to do was rebrand our organization so the population knew who we are and what we did," Gedwed said. "When I would tell people I work for UICI they'd say, 'What does that stand for?' and I had to say, 'Nothing.'"

In 2004, UICI purchased the assets and technology of Connecticut-based HealthMarket Inc., which it saw as "a pioneer" in consumer-guided health care for small businesses.

"It complemented very well what we were missing" Gedwed said. "It provided us with significant technology tools that we could employ here at HealthMarkets, to provide our customer with a wide range of tools to help them drive down the health-care cost"

Shortly after, founder Jensen retired and UICI turned to a group of private equity investors. The company was acquired April 5 by a group including The Blackstone Group, Goldman Sachs Capital Partners and DLJ Merchant Banking Partners, in a transaction reportedly valued at $1.7 billion. UICI officially changed its name to HealthMarkets on April 14.

"We have strong financial partners now," Gedwed said. The move has been a "tremendous advantage," he added.

"We see, every day, UnitedHealth and Aetna and those players coming into our marketplace. Individual [insurance] is the fastest growing segment of health care,' Gedwed said.

"They're all getting into the market," Goodman said. "... even Kaiser and Blue Cross, which are the last ones to join, because their traditional philosophy is the furthest away from what we're doing here."

Technology Boost

"I think [HealthMarkets] has a state-of-the-art product. No one has anything like the tools that they have," Goodman said. "They also paid a great deal of money. They bought it from [former chairman and founder of Oxford Health Plans] Steve Wiggins." The company's Web-based tools took more than $100 million and four years to build, Gedwed said.

Two things are driving the industry-wide move to consumer-driven health care, Goodman said: concern about unrelenting increases in health-care costs and the disappearance of managed care.

"We can't go on forever with health-care inflation at twice the growth of income, which is what we've been experiencing," Goodman said. In the 1990s, the industry pursued managed care as a way to control costs. "This is a shift away from managed care."

With HealthMarkets' Consumer Guided Health Insurance plans, a consumer can view the Maximum Allowable Charge--how much the plan pays for a particular doctor or service--and their own financial responsibility above and beyond the MAC, if any.

"No one else has anything like this: 400,000 doctors and 20,000 procedures," Goodman said. According to the Web site of the American Medical Association, there are more than 690,000 licensed physicians nationwide.

By contrast, the Aetna experiment in Cincinnati is dealing with fewer procedures, Goodman said. Aetna recently expanded its price transparency pilot program in Cincinnati to several additional markets. "What Aetna's done is minuscule compared to what HealthMarkets can do."

Even state regulators are impressed with HealthMarkets' technology tools and have been asking the company for demos and advice. "We're talking to the states about making our HealthMarkets tools available to them," Gedwed said. "We're talking to the federal government about using those tools in the Medicare markets as well."

By October, all of HealthMarkets' products will be connected to its Internet and telephone assistance tools; the Consumer Guided Health Insurance plans are already in sync.

HealthMarkets is now making its technology product available only to its insureds, but other parties are interested.

"They have talked about leasing the software with other companies that aren't directly in competition with them," Goodman said. "It may be that it becomes available to more people."

MEDIA MARCH: HealthMarkets launched a nationwide ad campaign in such publications as USA Today, The Wall Street Journal. The New York Times, People, Money Inc., Fortune Small Business, and BusinessWeek, and such Web sites as Yahoo, MSN and Google in an effort to rebrand itself and introduce its Consumer Guided Health insurance products.

Key Points

* Texas-based health and life insurer UICI has re-emerged under a new name, HealthMarkets. * The company's acquired technologies have helped it create Consumer Guided Health Insurance, designed to afford price transparency to plan members.

* The company foresees its new high-tech tools will help reduce health-care costs nationwide by giving consumers the information to make informed health-care choices.

Consumer-Driven Offerings

Consumer-driven health plans are quickly becoming part of health insurers' products nationwide, with such variations as health spending accounts, personal care accounts and defined-contribution health plans.

Health insurer Aetna Inc. announced in June that it would extend its transparency pilot program in the Cincinnati area to include several new markets. The move was partly based on a recent study showing that 84% of Americans want to know the price of health care. Effective Aug. 18, Aetna will provide price, clinical quality and efficiency information for physicians in Connecticut; Washington, D.C.; northern Virginia; Maryland; northern Kentucky; southeast Indiana; southern Florida; and five cities in Ohio: Cincinnati, Cleveland, Columbus, Dayton and Springfield. The company will provide price information only for physicians in Kansas City, Kan.; Kansas City, Mo.; Las Vegas and Pittsburgh. Clinical quality and efficiency information will be available for more than 14,800 specialists, and specific pricing will be available for more than 70,000 physicians. Aetna launched its true price transparency program in August 2005; 600 to 1,000 consumers a month have accessed information on some 5,000 physicians and physician groups in the greater Cincinnati area.

In April, Cigna HealthCare expanded the availability of its consumer-driven Cigna Choice Fund Health Reimbursement Arrangement plans to businesses with 51 to 200 employees in several states: Arizona, Colorado, Texas, Connecticut, Maine, New Hampshire, Vermont, New York, New Jersey, North Carolina, South Carolina, Tennessee and Florida. Previously the plan was offered only to companies with more than 200 employees. The expansion covers plans that took effect June 1. In May, the company said it would expand its Cigna Custom Benefit Builder--which allows employees to build their own benefit plan based on their unique needs--to mid-sized Florida employers with 500 or more employees, beginning in 2007. The plan was introduced earlier this year nationally to employers with more then 5,000 employees. Earlier this year, a Cigna study of first-time users of consumer-driven health plans found such consumers generated an 8% reduction in medical costs, while making such positive changes in health behavior as increasing their use of prescribed medications to treat chronic health-care conditions.

Lumenos, a division of WellPoint Inc.--the largest publicly-traded commercial health benefits company nationwide--offers three consumer-driven health plans. The Lumenos Health Savings Account Plan is funded by employees' pre-tax contributions T. and can include employer contributions. The Lumenos Health Reimbursement Account Plan is funded by the employer for routine medical care, including prescriptions. Both plans include a traditional health coverage component, a preferred provider organization, to protect against large expenses. The Lumenos Health Incentive Account Plan offers all the benefits of a typical PPO health plan, plus the ability for consumers to earn health-care dollars by taking steps to improve their health potential.

Minneapolis-based UnitedHealth Group said membership in its employer-sponsored consumer-driven health plans surpassed the 1 million mark on July 1. The group has nearly 325,000 members in its Health Savings Accounts and more than 675,000 members in its Health Reimbursement Arrangement plan. In April, the company launched its Reward for Actions program, which combines consumer health education with financial incentives tied to recommended care for people with certain chronic conditions: diabetes, asthma, heart disease and high blood pressure. It was developed by UnitedHealth Group's Definity Health business, which specializes in consumer-focused health strategies.

Learn More

HealthMarkets A.M. Best Company # 58107 Distribution: Dedicated agent force

Aetna Health & Life Insurance Co. A.M. Best Company # 08189 Distribution: Brokers, consultants, retail networks (pharmacy products)

Cigna HealthCare A.M. Best Company # 68124 (Cigna Insurance Group) Distribution: Agents and brokers

Lumenos Inc. A.M. Best Company # 68970 (WellPoint Group/Blue Cross of California) Distribution: Independent agents, brokers, consultants, direct

UnitedHealth Group A.M. Best Company # 69973 Distribution: Producers, benefits consultants, direct sales, direct distribution, cross-selling

For ratings and other financial strength information about these companies, visit www.ambest.com.