Health insurance startup joins Illinois market in flux

Chicago-area residents who buy health plans on the federal online insurance marketplace will see some new options for 2016 that are a sign of where health care is headed.

Insurance startup Harken Health will launch in Cook County on Nov. 1, when the Affordable Care Act's third open enrollment season begins, company executives told the Tribune in an exclusive interview. Harken will combine an insurance plan with its own medical clinics in a kind of holistic system that President Barack Obama's health care law encourages.

Harken's entry comes at a time of upheaval in the Illinois individual marketplace. Assurant Health, which was new to the Illinois health insurance exchange this year, is shutting down its financially troubled insurance business and will not sell plans during open enrollment. Blue Cross and Blue Shield of Illinois, the state's largest health insurer, is eliminating its popular individual plan that had the largest network of doctors and hospitals. Blue Cross said on its website that it plans to announce details about a new product for the Chicago area later this month.

Plans and pricing for 2016 are expected to be available as early as Sunday on Healthcare.gov for consumers to begin window shopping.

"There's major flux in the market," said Bill Hallberg, chief enrollment officer at ACAenroll.com.

"Carriers are reshuffling the decks on their offerings in order to reach some form of profitability."

Harken is a symbol of the changes. The company is an independently operated subsidiary of UnitedHealth Group, the nation's largest health insurer. UnitedHealth has taken a cautious approach to the Affordable Care Act, also known as Obamacare. It did not participate in the first year of the Illinois exchange in 2014 and this year offered individual plans only in Cook County. A company spokesman said UnitedHealth will offer plans in more Illinois counties in 2016 but declined further comment.

In 2014, UnitedHealth put together a small group of employees, led by Tom Vanderheyden, vice president of business development and innovation, to come up with something new. Acknowledging the frustration of consumers over the complexity of insurance, Vanderheyden said the group looked outside the industry at companies known for good customer service. For example, he looked to the simplicity of the menu at the Chipotle restaurant in rethinking how an insurance company should design a plan.

"I don't know what coinsurance means," said Vanderheyden, Harken's CEO. "I don't want to know what coinsurance means because 99 percent of people on the planet don't and ideally shouldn't."

To keep it simple, Harken's plans will have no coinsurance, the coverage that usually kicks in after the deductible has been met. Members' copays will be limited to prescription drugs. Otherwise, members will receive unlimited, free primary care visits.

But there's a catch. Members will have to visit one of four doctor's offices Harken is opening in Des Plaines and the Chicago neighborhoods of Edgewater, Wicker Park and South Loop.

The Edgewater clinic is in a new strip center next to a Chipotle and a mattress store. The lobby features soft lighting, muted colors and stuffed chairs. The exam rooms have flat-screen monitors where patients can review their medical records with their doctors.

In addition to doctors, all on salary, the clinics will provide patients with a team of health coaches and behavioral health specialists who also will coordinate care with specialists, Vanderheyden said. Harken members will have access to UnitedHealth's Chicago area network, which includes Northwestern Memorial Hospital, University of Chicago Medicine and Lurie Children's Hospital.

The integrated care model is nothing new. Kaiser Permanente in California has been doing it since the 1940s, but others haven't had as much success replicating it. The model is back in favor as health systems and insurers look for ways to improve patient outcomes and reduce costs.

Health insurers are partnering with doctors and hospitals to form accountable care organizations, or ACOs, as a way of controlling more aspects of patient care. But there are concerns people will balk at the limits all-encompassing systems place on where patients can seek care.

"Harken, ACOs and others are all trying to solve the same problem in slightly different ways," said Marc Pierce, president of Stonegate Advisors, a health care consulting firm in Chicago. "How do you effectively coordinate the care of the individual?"

Because of the location of the clinics, Harken's plans will only be available in Cook County next year. But that's still a big market.

Cook County boasts one of the highest numbers of people enrolled in individual health plans through Obamacare in the nation, with 157,223 people signed up as of February, according to the Centers for Medicare & Medicaid Services. Only three other counties had enrolled more people: Miami-Dade County, Fla.; Harris County, Texas; and Broward County, Fla.

Across Illinois, nearly 350,000 were enrolled in Obamacare plans.

Cook County also has an attractive demographic for insurers. More than 30 percent of its enrollees are 18-to-34-year-olds. Insurers count on young adults to buy coverage, helping spread the risk and hold down premiums for everybody.

The plans fall under one of five categories, or "metal levels," which determine how much consumers and their plans share in the costs of care. The bulk of people enrolled in Cook County are on the silver plan, accounting for about 93,000 people. Under the silver plan, consumers pay about 30 percent of the cost, and the health plan pays for about 70 percent.

Judging from the location of its clinics, Harken appears to be aiming for young adult members, but Vanderheyden said that's not the case. He said he expects the plans to appeal to anyone looking for a more personal relationship with their physician and someone who can help them navigate the system. Patients will have access to a member of Harken's care team around the clock by phone, email, text or video chat, he added.

Harken will offer five plans in the gold, silver and bronze tiers. The company said the monthly premium, not including any subsidies, for a 27-year-old on one of its silver plans will be $228.97 with a $3,750 individual deductible. Harken also will sell plans in the small-business group market.

While Vanderheyden said the plans are priced competitively, he is looking beyond price as a selling point.

"This is a very complicated industry," Vanderheyden said. "We are trying to reduce the points of friction and abrasion in it, knowing that we can't make everything simple. But we think we can take the edges off in a very meaningful way for people like me who are really frustrated by the edges."

Chicago Tribune reporters John Russell and Jennifer Richards contributed.