Workers Can Pick Traditional Insurance or HMO : 2 County Companies Offer Dual Health Plan

PM Group Life Insurance Co. and Health Plan of America--two county companies competing for group health insurance premiums--said Thursday that they have joined forces to market a dual health plan to Southern California businesses.

The companies said they started jointly selling PM Group Life’s traditional health insurance and Health Plan’s health maintenance organization (HMO) this month.

Employers who sign up for the dual policy will offer workers a choice of PM Group Life or Health Plan of America. The dual policies will be managed as one by PM Group Life, which will cut overhead.

Typically, HMOs and insurance plans offered by an employer are administered by separate companies.

For PM Group Life, a Fountain Valley-based subsidiary of Pacific Mutual Life Insurance Co., the agreement will broaden its services and make it more competitive with the largest insurance companies, which have started their own HMOs.

Health Plan of America, an Orange-based subsidiary of the nonprofit St. Joseph Health System, will benefit by being able to more easily sell its plan to companies already established with PM Group Life. In addition to basic health coverage, long-term disability and dental and vision plans will be available.

PM Group Life insures about 230,000 employees in its group health plans. Health Plan of America has about 96,000 members.

The plan will be marketed by sales representatives of each company; the two companies will equally share expenses and revenues.

Michael Turpin, an assistant vice president at Johnson & Higgins, an employee benefits consulting firm in Costa Mesa, said the agreement is a necessary response to competitive changes in the industry.

Traditional health insurance companies have lost clients to HMOs, which are particularly popular among younger workers. Consequently, insurance companies have a disproportionate number of older workers who tend to have bigger medical bills, he said.

He said that medium-size operations such as Pacific Mutual Group Life have moved slowly in offering HMO plans and that some still have no HMO options.

PM Group Life spokesman Jim Burke said his company has not started its own HMO because the costs of establishing a network are staggering. He said PM Group Life considered buying an HMO about 18 months ago but decided to study alternatives.

Burke said there is no plan to buy Health Plan of America’s operations.

Health Plan of America President Lawrence Kugelman said Health Plan of America could gain up to 10,000 customers a year through the joint marketing agreement. The plan is to be sold statewide later this year.