Deseret News (Salt Lake City) - Small firms offered an insurance break

Associated Industries of the Inland Northwest says it has seen a sharp increase in membership this year following its decision to dump the longtime health-care insurer that served its members in favor of a provider that enabled it to expand its reach statewide and to serve a broader range of employers.
At the beginning of this year, the Spokane-based nonprofit employers group began offering to members a health-insurance plan provided by United Healthcare, ending a 50-year relationship with Premera Blue Cross, says Jim DeWalt, the organization’s president. Since then, Associated Industries has picked up about 80 additional companies as members, 70 of which have signed up to have the Spokane group offer their employee health benefit package, DeWalt says.

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The shift to a new insurer, he says, has re-energized the nearly 100-year-old association.
“We had a decline (in membership) related to a sharp decrease in medical health participation,” DeWalt says.
Associated Industries now has 535 member companies. Of those, nearly 250 companies buy employee health coverage through the Spokane group’s Associated Employers Trust, which now covers 5,980 people, counting both employees and their dependents, up from 3,510 people at the beginning of the year. At its peak six years ago, the trust was covering 313 member companies and more than 8,000 people.
The trust is expected to collect $20 million in health-care premiums this year from its member employers, up from $14 million in 2007, DeWalt says.
The gains in membership and health-care plan participation are both directly related to Associated Industries’ decision to switch to UnitedHealthcare, which is a division of Minnetonka, Minn.-based UnitedHealth Group, DeWalt says.
The switch helped Associated Industries expand its membership base in two ways. First, Premera had 60 percent of the insurance market share in Washington, both through direct sales and through its relationship with other associations, limiting Associated Industries’ opportunity to market the product, says Ted Blotsky, Associated Industries’ senior vice president. He says the Spokane organization had no ability to compete for established Premera customers. Since UnitedHealthcare is new to the small-business market, it offers a new competitive edge to previously limited choices, he says.
“With a company that has only 10 percent of the market it opens up our ability to market the health plans,” Blotsky says.
Secondly, UnitedHealthcare provides Associated Industries with plans that can be offered to companies that have five to 99 employees. Premera’s plans only could be offered to companies with 50 or fewer employees.
“Over time, our needs were different than what could be met by Premera Blue Cross of Washington,” DeWalt says.
To continue growing in the future, the association can sell UnitedHealthcare benefits outside of Washington, which it could not do with Premera Blue Cross’ plans, Blotsky says.
DeWalt says UnitedHealthcare hadn’t previously offered health plans to small businesses, and has agreed to limit the number of associations it deals with in the small-business market to three, giving Associated Industries less competition to market plans statewide than it faced when offering Premera’s plans.
That, in turn, is helping the employers group to expand its statewide footprint in other ways, by selling its other services to the companies that sign on for the health-care plans. In addition to health plans, Associated Industries offers electronic payroll, training, and other human-resources services. DeWalt says the robust response to the new health offering gives the association greater confidence that it can sell its services statewide.
Blotsky says 50 percent of the new business it’s now doing through its Associated Employers Trust is from the Interstate 5 corridor in Western Washington. The nonprofit has added two employees in the last year, and expects to hire two more staff members to help it handle the growth and expected increases in other services it offers.
DeWalt says participation in the association’s health plans had dwindled in recent years partly because Premera’s plans didn’t allow Associated Industries to continue to cover member companies when they grew beyond 50 employees.
Seeing UnitedHealthcare enter the market was a welcome addition, he says. Before that, only Premera Blue Cross and Asuris Northwest Health were offering small-group plans to associations, he says.
“If you believe in a free market, you’d believe that’s not a healthy environment,” DeWalt says.
New approach
DeWalt says UnitedHealthcare’s different approach to marketing has helped it regain momentum.
Rather than flooding the state by offering its new product to a number of similar associations, UnitedHealthcare is collaborating with Associated Industries to offer a new product that gives it a competitive boost in the state, with the possibility of future expansion into Idaho, Oregon, and Montana - something that was not possible with Premera, Blotsky says.