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Finding insurance carriers that can compete against Wellmark Blue Cross and Blue Shield in Iowa’s individual health market is challenging. Just ask Tami Rubino, operations director for Benefit Source Inc., a West Des Moines-based benefits broker.

“Wellmark is really good at what they do, and that makes it tough,” Rubino said. “Iowa is hurting for some competitive carriers to come into the market in the individual market.”

Wellmark controls approximately 71 percent of the overall health insurance market in Iowa. The lack of competition isn’t unique to the Hawkeye State. Iowa is among at least 21 states in which one carrier controls more than half the market, according to a July 2009 report by the Center for American Progress, a progressive Washington, D.C., think tank.

However, some carriers are trying to chip away at Wellmark’s dominant position in Iowa, and Rubino is among the brokers signing up to offer their products.

More direct purchases

Last month, Golden Rule launched four new individual health plans designed for self-employed individuals and microenterprise owners. The company, which operates in 40 states, is initially offering the products in Washington, D.C., and 20 states, including Iowa. UnitedHealthcare, Golden Rule’s parent company, is the second most dominant health insurance carrier in Iowa after Wellmark, with approximately 9 percent of the market.

According to a recent article by American Medical News, rising unemployment rates are creating more competition in the individual insurance market, as insurers seek to replace group premium dollars lost when workers lose their job-based coverage.

The latest data available indicates that about 26.7 million Americans were covered by “direct-purchase” insurance in 2007, and for every percentage-point increase in the unemployment rate, an estimated 1.1 million more people become uninsured.

Golden Rule is offering its new plans in Iowa and other states through a partnership with the National Association for the Self Employed (NASE), a nonprofit association representing small businesses. The company estimates its initial 20-state market area includes more than 10 million entrepreneurs who may want to buy health insurance.

“Our goal was to give people choices today, because even if health-care reform in its present form was passed, it would take some time to go into effect,” said Ellen Laden, a spokeswoman at Golden Rule’s Indianapolis home office. The company estimates there are nearly 203,000 self-employed business owners in Iowa, based on 2007 census data.

“There are people striving to keep their businesses viable and also having to worry about their insurance as well,” she said. “NASE has the expertise in what small business owners were looking for, and we have the expertise in the individual market. So we’re filling an immediate need.”

Self-employed individuals or business owners must become a member of NASE to be eligible for the insurance, which is offered as an association health plan. NASE’s membership dues are $5 per month, Laden said.

The partnership provides “a good marketing tool,” Rubino said. “I think we’re going to see more association-related marketing down the road.” Under state insurance rules in Iowa, a group or association cannot be created solely for the purpose of selling health insurance.

Rubino said she is seeing a lot of activity in the individual health insurance market in Iowa, but it’s primarily people who lost their group coverage when they lost their jobs and cannot afford to continue it through COBRA (Continuation of Benefits Reconciliation Act) benefits.

Though Congress has extended the 65 percent subsidy of COBRA payments, the remaining cost is still too high for many individuals, and more expensive than what an individual plan would cost, Rubino said.

Additionally, “for individual coverage, if they’ve had any kind of health issue, it’s very hard to get them covered,” she said.

Too aggressive

It’s possible for insurers to price their products too low initially, Rubino said. A couple of years ago American Community Insurance Co. introduced a product line that was “very aggressive” in its pricing, but the carrier was unable to sustain that level of premium, Rubino said.

“When we start to see 50, 60 percent (increases in cost for) renewals from a company, we start to get concerned,” she said. “When a carrier gets themselves in that situation, they really have no choice but to increase premiums, which they did.”

In addition to adding Golden Rule, Benefit Source last week began carrying individual plans from American National Insurance Co., a Galveston, Texas-based company.

Though American National is not targeting solely small business owners, it’s a “great option” for that market because the policies offer higher deductibles and policy limits that provide a range of price options, Rubino said.

“As agents, they need to shift more to being educators, to sit down and teach their clients how to use their health plans and get more bang for the buck,” she said. “With carriers like American National, we can cut their premiums in half.”