Apparently, threats still work to get your way. Just like a teenager threatens to run away from home because he can’t use the family car on Saturday night, Rob Lynch, CEO of VSP, threatened to move the corporate headquarters out of California because stand alone vision plans were not to be offered in the new California Health Benefit Exchange (CHBE).
Yes Sir! How high Sir?
After Lynch’s threats to decamp from Sacramento and move to a state that really loved him surfaced, local leaders and politicians put the screws to the Exchange. We now are told that Executive Director of the CHBE, Peter Lee, will seek to have the board reconsider their decision.
Group plans first
VSP was built not on individual policies but on group plans. The group market has always been more lucrative because they usually require a minimum of 5 employees and the employer to pay part, if not all, of the premium. In 2007 VSP started selling individual plans and went nationwide in 2010.
Funnel of government money to private companies
It is so curious that so many health insurance companies that fought the Affordable Care Act and, now that it is here, they are fighting to get a piece of the pie. The issue for VSP is if they will be included on the CHBE site to be selected as a vision plan separate from the health insurance carrier. Because most of the individuals going through the CHBE will receive a government subsidy, which only applies to health insurance, there is the issue of applying the government credit only to the health and not the vision portion of the purchase.
Super size me with a vision plan
Frankly, it is a little immature for a CEO of company to threaten to move the headquarters out of state just because some government bureaucracy won’t give him free publicity on a website. While vision insurance is important, how many individuals that will be subsidized to purchase health insurance in the first place can really afford the extra expense of a vision plan?
My state loves you more…with tax credits
I commend Mr. Lynch for being the manager that will risk being ejected from the ball game to argue a bad call from an umpire. Unfortunately, in the hyper-competitive atmosphere where states are all too eager to offer incentives and tax breaks for companies to relocate, the threat of moving only adds fuel the poaching efforts.
VSP has a legitimate concern over watching the market place change and consequently being put at a disadvantage. WellPoint, Anthem Blue Cross in California, purchased 1-800-Contacts a couple of months and there are other insurance companies that own their own optical providers. The ACA is changing the whole insurance market place and how insurance companies generate revenue (see my blog post on commissions and the MLR).
Regulations are a bummer
VSP is a great company and I hope they stay in the Sacramento region. But just as we are being told in this Presidential election season “You didn’t build that”, private corporations need to remember “You don’t own that”.