UnitedHealthcare Launches A Smaller, ‘Very, Very Different’ Insurer

March 14--UnitedHealthcare is facing competition this year in Atlanta and Chicago from a new name in health insurance -- a carrier that's actually one of its subsidiaries.

For the first time, individual shoppers are buying coverage from Harken Health, a company with about 100 employees based at an office on the UnitedHealthcare corporate campus in Minnetonka.

Harken is being run as an independent entity, executives said, with a distinct approach to selling coverage. Subscribers receive unlimited access to primary care, without copays, if they visit a health center owned by Harken Health.

"It's like an automobile company that makes a brand of car, and then with better luck or worse luck they also make a Saturn," said Roger Feldman, a health insurance expert at the University of Minnesota.

Traditionally, UnitedHealthcare has been a bigger player selling health insurance to large employer groups, Feldman said, rather than to individuals and small groups being courted by Harken. So, the new offering looks like an effort to "make some more headway into that market segment," he said.

The market for individual policies is growing with the federal Affordable Care Act, which provides tax credits to those who buy private coverage through a government-run health insurance exchange. Harken Health is on the federal government's HealthCare.gov exchange for Atlanta and Chicago, where UnitedHealthcare plans are offered to the same consumers.

Harken sells a "bronze" quality plan with a $6,850 deductible to a 40-year-old in Chicago for $242 per month. UnitedHealthcare offers slightly lower deductibles and monthly costs of $255 and $269.

The strategy helps highlight unique aspects of Harken Health coverage outside the UnitedHealthcare brand, said Sheryl Skolnick, an analyst with Mizuho Securities USA. Take a tour of the Harken Health website, she pointed out, and the feel is decidedly "anti-corporate."

"It doesn't feel like a megalithic monster company is coming here to run my life," Skolnick said. "It feels like a Dr. Harken someplace is coming here to take care of me."

To be clear, there is no Dr. Harken. The name is meant to capture the company goals of listening to patients and returning to simpler times in health care, said Chief Executive Tom Vanderheyden.

Vanderheyden started working for UnitedHealth Group in 2003, handling everything from mergers and acquisitions to the launch of operations in India. Before that, he spent 20 years in sales, consulting and management at several companies, including IBM.

"I'm not a health care guy," Vanderheyden said. "I don't like insurance very much."

Irritation with the status quo in health care, he said, is one reason Harken Health wants to help change the system, including the language connected with coverage.

Rather than charge a premium, Harken Health says it collects a "membership fee." The company's clinics are called "health centers." Beyond not charging copays at the centers, there's also no "coinsurance" -- a form of cost-sharing that Vanderheyden says just adds complexity.

By simplifying payment, the centers don't have to bother with all the paperwork and hassle to get paid by insurers, Vanderheyden said.

Harken Health centers offer guidance from counselors called "health coaches," and space for classes in nutrition, tai chi and yoga. The centers are designed to feel less like a hospital and more like a Pottery Barn.

"With insurance, what do you get?" Vanderheyden asked. "You get protection. You get the monthly irritation of writing the payment. We're trying to change that to say, 'No, you actually get something with your membership.' "

Developing a brand

The idea for Harken Health started in early 2014 from a team of executives within UnitedHealthcare that set out to re-imagine how the health system and coverage could work.

Ultimately, they decided to develop an independent company with its own brand to focus on individual purchasers, Vanderheyden said. In a regulatory filing this month, Harken Health said it's received $65 million in capital from its parent company to fund start-up expenses.

"We really wanted to do a start-over, a do-over, in this market, to say: You know what, we're going to bring something that is very, very different," he said.

Harken Health isn't alone in experimenting with new strategies to reach people who buy coverage on their own.

The New York-based start-up Oscar is targeting individuals with millennial-focused marketing including wearable devices that track fitness goals. In Portland, Ore., a new insurer called Zoom+ is selling coverage that offers easy access to its own clinics plus wellness programs that seem similar to Harken Health's.

"It's a millennial health system designed to give you radical access and control of your care," said Dave Sanders, the company's co-founder and chief executive.

Harken Health isn't explicitly targeting millennials. The company isn't saying how many people have signed up for coverage so far, but Vanderheyden says purchasers have come from all ages and backgrounds.

Shoppers respond

Robert Slayton, an insurance agent in the Chicago suburb of Naperville, said that "people under 40 like the clinic idea" with Harken Health, whose coverage and clinics launched Jan. 1. At the time, Chicago's health care market faced big changes.

Blue Cross and Blue Shield of Illinois has been the biggest player in the state's individual market. High medical costs prompted Blue Cross to discontinue a popular product offering broad access to hospitals and doctors in Cook County, said Jordan Wishner, an insurance agent in Chicago.

That set the stage for growth at Harken Health, Wishner said, because the new insurer's premiums were low and offered broader access to doctors and hospitals -- even compared with a UnitedHealthcare HMO.

At its launch, Harken Health had to bet on how many health centers would be needed, since the company didn't know how many people would sign up for coverage. It was a risky calculation. Patients would be frustrated by a lack of centers. With too many, the company would carry the cost.

Executives opted for four in Chicago and six in Atlanta, Vanderheyden said. The supply worked, he said, even though Harken exceeded enrollment plans.

Now, Harken Health is eyeing new markets.

"We are growing. ... It is going to be a meaningful expansion this year."

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