When it comes to health insurance, Idaho has been a two-company state for decades.
As the government shakes up health benefit rules for employers, the insurance industry is in the middle of its most extreme transformation since President Johnson's administration. Idaho's insurers feel the tremor.
The pressure is on for state lawmakers to decide the fate of Idaho's health insurance exchange. That may determine the success of the state's insurance companies.
Regardless of who runs the marketplace - the state or the feds - thousands of Idahoans will use it.
At the same time, two large insurance companies from out of state are ramping up to build market share by adding thousands of Idaho employees and self-insured patients to their rolls.
Both of Idaho's largest health insurance companies say the Affordable Care Act didn't do much to directly lower the cost of health care. It placed caps and triggers at certain points of the health care delivery system - mostly on the insurance side - and offered carrots and sticks to reduce waste and overspending.
It capped at 20 cents per premium dollar the amount of money insurers can spend on themselves, instead of on medical claims and benefit improvements. It also mandated that insurers justify double-digit rate increases.
At the same time, it ordered insurers to:
Start footing the bill for annual checkups and other preventive-care services.
Cover things like occupational therapy, pediatric dental care and vision screenings.
Cover anyone who wants insurance.
Stop paying attention to certain risk factors, such as gender or health, when they set rates for certain groups.
When it comes to health insurance in Idaho, "What we're facing [is] fundamentally the largest-scale change since the 1960s," says Scott Kreiling, president of Regence BlueShield of Idaho.
All of those changes, together, are meant to lower the nation's health care spending in the long term. But Idaho's largest insurers - Blue Cross of Idaho and Regence BlueShield of Idaho - say those changes will mean higher premiums for a lot of people. So they're scrambling to become leaner and more efficient.
Existing employees are taking on new duties, say the leaders of Blue Cross and Regence. Blue Cross is investing several million dollars in preparations, like technology and a call center that can handle a surge in questions from confused Idahoans, says CEO and President Zelda Geyer-Sylvia. The company has hired about 10 people to ramp up for 2014.
Both insurers also hope new - and old - initiatives with local hospital networks will temper skyrocketing costs.
Blue Cross of Idaho has a longstanding program that pays hospitals more if they meet quality goals like using a surgery checklist and lowering their patient re-admission rates. This program has paid millions of dollars to hospitals in the state, according to Blue Cross. A new Medicare program does the same thing, but it's national and uses about three dozen metrics.
Regence and St. Luke's Health System now offer free office visits to some of their sickest patients. The insurer and doctor trade information about the patient to cut down on duplication and make sure a heart patient, say, is taking his heart medication. Regence, not St. Luke's, absorbs the patient's copayment.
As Idaho has grown, new competitors have slowly entered the market. An Oregon-based insurer markets to health-conscious consumers, and Utah insurer SelectHealth just launched an alliance with St. Luke's Health System that gave it an immediate foothold in southern Idaho.
A BIG SPLASH
St. Luke's Health says its partnership with SelectHealth has two goals: to add competition to the Idaho marketplace for health insurance and to try something new to reward high-quality health care. SelectHealth, which has about 600,000 members in Utah, now is selling individual, small-employer and Medicare Advantage plans in Idaho.
The health system last year announced it was replacing its former health insurance benefits administrator, AmeriBen, with SelectHealth, which is part of the Intermountain Healthcare system. The switchover of all St. Luke's-insured employees this spring means that SelectHealth is starting out in Idaho with about 20,000 members. The insurer opened an office in Meridian, currently with just four employees, and hired Jerry Edgington to run Idaho operations.
The arrangement has a few core elements:
It centers on St. Luke's. A person covered by SelectHealth will usually have to see a St. Luke's doctor. (Emergencies are an exception; if someone has a car crash and is taken to a non-St. Luke's hospital, the treatment will be covered.)
Data sharing. The insurer and its network - mainly St. Luke's - will exchange data and medical records to keep patients and health care providers on track.
Edgington gives an example: A red flag will go up if a diabetes patient doesn't keep up with blood and eye tests, by way of data-sharing between the doctor, through medical records, and SelectHealth, through medical claims.
"When they do [have the tests], we send them notes of congratulations and awareness; when they don't, we send them reminders," Edgington says. The doctors then "don't have to create a separate item, a follow-up, and they can focus on [other patients]."
Health savings accounts. These are increasingly popular nationally among large employers. The plans have high deductibles, making them cheaper than low-deductible plans. The employee pays out-of-pocket costs using their pretax contributions instead of cash, so they're less likely to go to the emergency room with a cough. About one-third of SelectHealth's non-Medicare members in Utah have opted for the high-deductible HSAs, Edgington says.
Oregon-based PacificSource has been steadily gaining ground over the past few years, growing from 18,653 individual and employer-sponsored members in December 2009 to 44,551 in December 2012.
Dave Self, senior vice president of marketing and regional director of Idaho and Washington, has been closely involved with efforts to create an Idaho-based health insurance exchange.
"There's enough specificity right now that [insurance] companies should be putting together a game plan" for competing on the exchange, he says. About 80 percent of Idaho households are projected to qualify for some kind of health care tax credit or other assistance, he says. PacificSource is trying to get into the mind of a retail consumer - the self-employed couple, the single graduate student, the young family without employer-sponsored coverage - and craft plans that appeal to that consumer. Health insurance for large groups, such as Idaho businesses with national parent companies, is the dominion of large out-of-state insurers like Aetna.
"Any company waiting for a big bolt to come down from Department of Health and Welfare ... is missing the boat," Self says.
He declined to give specifics about the company's plans, but here's the general idea: The health insurance exchange will have four tiers of health plans named after metals, and each of those tiers will offer a different level of coverage. "A company's going to place a bet and say, 'We think we can compete in the silver category,'" Self says.
PacificSource added 20 people to its Boise office around Thanksgiving and has been in the process of hiring three people to lead its Medicare Advantage team. Medicare Advantage customers made up 15,438 of PacificSource members as of late January.
The staffing-up effort is the result of "rather explosive growth" in the fourth quarter of 2012, Self says.
"We've been very competitive, and yes, we've attracted some [customers] from our competition," he says. But Blue Cross and Regence, he says, are "very strong ... well established [and] certainly not going away."