The changing face of Montana's health insurance market 

Montana's health insurance market is on the cusp of some serious change. Last month, the state green-lighted a $25 million deal that will see 8,600 insured New West Health Services clients transferred to Oregon-based PacificSource. Just days before, the grassroots Montana Health Cooperative received a $58 million federal start-up grant to help launch its operation.

PacificSource signed a letter of intent late last year to purchase a sizable chunk of New West, until now the state's second largest health insurer. The approval of that deal by Commissioner of Securities and Insurance Monica Lindeen marks the last step in a scale-down of New West's business in Montana.

The deal "brings another choice for consumers in Montana," Lindeen says. "And the more choice we have, the better."

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Lindeen says her office was careful to ensure that the 8,600 customers transferred to PacificSource would maintain the same benefits they presently have with New West. The agreement will also give PacificSource a "bigger stake" in the Montana market. PacificSource already had some 1,600 enrolled members in Montana, gained in the company's 2010 purchase of Clear One for $46 million.

Farther down the road, the Montana Health Cooperative could be giving established insurers a run for their money. Project officer Larry Turney says the co-op board recently established a search committee for a CEO and hopes to fill the position by July 1. The long-term goal of the co-op is to make the insurance market more competitive and bring even more choice to Montanans.

"By the middle of 2013, we'll have a staff of between 20 and 25 people," Turney says. "We'll be ready to offer insurance by October 2013."

The Montana-built co-op will differ from other insurers in one major way: Control of the company will largely rest in the hands of customers. Within two years of selling insurance, Turney says, the board will be elected by insured members. "They'll have a lot to say as far as how we spend our money and how we do business. Hopefully that'll help to control costs and keep our administrative costs down below 10 percent."

The Montana Health Cooperative was one of seven cooperatives across the country to receive funding through the Affordable Care Act this year. Lindeen has not yet seen a licensure application from the board.

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