Blue Cross Demands a True-Blue Broker

Health insurance can be nasty business.

Note, for instance, how Blue Cross of California just canceled its contract with a big insurance broker.

The Orange-based broker, Word & Brown, acts as a middleman between insurers like Blue Cross and agents who sell policies to small employers. The broker recently included Blue Cross’ archrival, San Francisco-based Blue Shield of California, among plans participating in a new product that it’s offering.

Word & Brown officials say Blue Cross retaliated by pulling its business from the firm, effective May 1. A Blue Cross spokeswoman said the company has a policy of not doing business with Blue Shield agents.

Word & Brown is the second such agency terminated for that reason, she said.

“Many people have a hard time distinguishing between Blue Cross and Blue Shield,” she added. “In many states, they are one company. In California, we are competitors--fierce competitors.”

Word & Brown’s new product, dubbed “California Choice,” mimics another provided through a state-run agency, known as the Health Insurance Plan of California. Both enable employees of small companies to select from a variety of plans.

Alan Puzarne, a senior vice president at Blue Shield, said that if things were reversed and Blue Cross had joined California Care, Blue Shield wouldn’t have backed out. “We can withstand competition from any health plan,” he said.

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Barbara Marsh covers health care for The Times. She can be reached at (714) 966-7762 and at barbara.marsh@latimes.com.