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North Dakota insurance market share

Sanford health plan could shake up North Dakota insurance market

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FARGO -- The Sanford Health Plan would join a sparse field of competitors if approved to enter the North Dakota health-insurance market.

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But will the entry of a health plan affiliated with a gigantic health system, Sanford-MeritCare, shake up the private health insurance market in North Dakota?

Blue Cross Blue Shield of North Dakota currently towers over its rivals in the health insurance field, commanding a market share of almost 90 percent, as measured by premium dollars, covering more than 475,000 people.

"I think it'll be a minor tremor, but I think it'll shake things up a bit," David Middaugh, president of Middaugh & Associates, an employee benefits agency in Fargo, said of the possibility of Sanford entering the fray. "They'll have a presence right away."

Sanford, based in Sioux Falls, S.D., has been offering health coverage since 1998, and has become the No. 2 private health insurance firm in South Dakota, behind Wellmark, the Blue Cross Blue Shield plan, which covers 315,526 people.

The Sanford plan now covers 51,000 people in South Dakota, Minnesota and Iowa, and hopes to double enrollees to 100,000 in five years.

The plan is affiliated with Sanford Health, a large health-provider network that is poised to merge with Fargo-based MeritCare later this year.

Executives of both health systems hope to offer their insurance program, which would be open to other health providers, with coverage beginning Jan. 1, pending regulatory approval.

"In North Dakota we have already started getting requests for information about Sanford's insurance plan," MeritCare spokesman Darren Huber said. "It's clear people want additional high-quality options for insurance."

Adam Hamm, North Dakota insurance commissioner, said his staff is reviewing hundreds of pages of documents comprising Sanford's application to offer health insurance in the state.

The review involves its ability to satisfy financial and operational requirements to serve customers well. If all goes well, a decision could come as soon as early October, he said.

"They're a significant player in South Dakota," Hamm said of Sanford. "They've indicated a strong intent to expand in our state. I'm obviously interested in seeing more choice and competition in North Dakota," provided companies are committed to providing good service and coverage "over the long haul."

South Dakota regulators say Sanford has a clean record there.

"There have been no adverse actions taken against them, no fines or suspensions," said Randy Moses, assistant director of the South Dakota Division of Insurance.

Sanford's interest in expanding its insurance program into North Dakota actually preceded its merger talks with MeritCare, which were made public June 17. Hamm said he met with Sanford representatives in March.

"There was absolutely no discussion in the meeting of a possible merger with MeritCare," Hamm said.

Ruth Krystopolski, Sanford Health Plan president, said "a lot of the leg work" had already been done before the two health systems decided to pursue the merger.

Employers served by Sanford in northern South Dakota have employees in North Dakota, the impetus for seeking authority to offer insurance in the neighboring state, Krystopolski said.

Sanford's insurance program has contracts with about 8,000 health providers, including doctors, clinics, hospitals and therapists.

"We don't have a product that's just our health system," Krystopolski said.

The Sanford Health Plan is a health maintenance organization, which combines insurance and delivery of health services.

Most of its insurance plans, however, allow those it covers to select their "preferred provider," but may pay more to go outside their chosen medical network, Krystopolski said.

Classic HMOs, as health maintenance organizations are called, never caught on in the North Dakota insurance market.

The Sanford plan focuses on wellness and preventive health, with a staff of 40 nurses and other health professionals who visit workplaces to help clients improve their health, Krystipolski said.

"I think they will accelerate the push toward wellness and away from illness," Middaugh said. His agency sells Blue Cross Blue Shield as well as Medica insurance, but he's interested in offering Sanford health insurance as well.

"I think competition is good for everyone, including the companies that compete with each other," Middaugh said. "It makes everyone better."

There's very little real competition in the North Dakota health insurance market today, Hamm said. By his tally, there are fewer than 10 companies that actively sell in the state, and only half that number offer individual coverage.

Blue Cross Blue Shield of North Dakota's current wellness staff includes exercise, nutrition and health education staff members who can work with employer groups, spokeswoman Denise Kolpack said.

As for Sanford's influence on the market, Kolpack had little to say.

"Until we know the specifics it's still speculative," she said. "We have competition that we deal with every day."

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