Locally grown’ insurance companies help fortify Washington state market

Reviewed by James Ives, M.Psych. (Editor)Aug 30 2019

Although few states have finalized their 2020 health insurance rates yet, preliminary reports suggest that increases in premiums for plans sold on the Affordable Care Act's marketplaces will be moderate again this year.

One analysis of those early state filings, which noted some states appear poised to have lower premiums next year, found that Washington had a lower rate increase than almost half the other states.

Insurance premiums for Washington's individual market are rising less than 1% on average next year, and the state's insurance commissioner, Mike Kreidler, credits much of that moderation to homegrown insurance companies.

"We've had locally grown insurers that dominated the health insurance market for individuals," Kreidler said. These insurers are tied to the local community and must succeed in Washington or in the Pacific Northwest region to stay in business. That motivates them to try harder to meet the needs of their customers, he said.

"Insurers that are local and tied to the community — not from out of state, coming in and out — they were ones that need to stay or they weren't going to be in business," Kreidler said.

Nearly 250,000 people who do not get coverage through their employers or the government buy health insurance in Washington's individual market, most of them shopping on the state's ACA exchange, the Washington Healthplanfinder.

The individual insurance market here features companies that do business only in the Pacific Northwest, such as Asuris Northwest Health and Premera Blue Cross. Both nonprofits have been selling health insurance in the region for many years. Premera and its subsidiary LifeWise Health Plan have taken about 13% of the total health insurance market in Washington, selling to companies and individuals, both inside and outside of the Obamacare marketplace.

"Local plans can really make a difference in stabilizing their state-based marketplace," said Emily Curran, a research fellow at the Center on Health Insurance Reforms at the Georgetown University Health Policy Institute in Washington, D.C. They help fill in geographical market gaps and build better partnerships with local doctors and hospitals, and are more effective at reaching underserved populations.

One key to their success, she said, is their commitment to a local market. They can succeed only if they make the business work locally.

"They have an incentive to make sure the market is stable," she said.

Premera, based in Mountlake Terrace, a Seattle suburb, has been selling insurance in Washington for more than 80 years and is now an independent licensee of the Blue Cross Blue Shield Association. It sells plans in 38 of the state's 39 counties and also operates in Alaska.

Asuris has been in the Washington market since 1933 and became part of Portland, Ore.-based Cambia in 1994. Asuris, which is too small to make the top 10 list of insurers in the state, sells health insurance outside the ACA marketplace. Its products are available in eastern Washington and Oregon as well as northern Idaho.

But the two largest companies in Washington's health insurance market are based elsewhere: Kaiser Foundation Health Plan has seized 19% of the market and UnitedHealth Group controls 14%. Washington's Healthplanfinder has shrunk slightly since 2014, from eight companies to six in 2019, but two new outside companies plan to join the market in 2020. (Kaiser Health News has no ties to Kaiser Permanente or the Kaiser Foundation Health Plan.)

Homegrown insurance companies aren't as prominent in other states, where national companies dominate most markets. But Curran said New York is another example of a state with a base of local insurers.

Companies with a bigger footprint can afford more customer churn in their business. The smaller guys need to hang on to its customers, so they offer a wide variety of insurance options, in gold, silver and bronze tiers, both inside and outside of the state marketplace.

But buying from a local plan sometimes has disadvantages. Some companies' plans limit consumers' ability to get full health coverage in other parts of the nation. While local companies are more likely to have agents and brokers who know their customers and their plan offerings, they also have smaller teams than the big national companies and may not be available on weekends and at night, so they cannot respond as quickly to customers' requests.

While Asuris has considered expanding — to the Seattle market, for example — Brady Cass, its president, said that just doesn't make business sense. "Health insurance is personal and it's very local," he said, adding that companies that find their niche, as Asuris has, can more easily weather marketplace storms.

Asuris also markets itself to local companies. Cass, who is a Washington native and has worked for Asuris for 14 years, mentioned examples such as a concierge program Asuris started for both employers and individuals that is designed to help immigrants from Latin America. His company also sent crisis counselors to a workplace where an employee had died on the job.

Barry Baker, CEO of Baker Construction & Development in Spokane, Wash., said Asuris helped his company find economical options for both the company and its employees.

Baker also likes that Cass is involved in his community; they have served on several nonprofit boards together. "He's super community-minded," Baker said. They share business values, making a profit but also putting their profit back to work right where it was earned, he said.

Said Cass: "We've kept our feet squarely in the market that we have built."