Arrowhead Credit Union Gets Serious About Helping Beat California's Uninsured Blues

SAN BERNARDINO, Calif. – As a growing number of Californians struggle without health insurance, Arrowhead Credit Union has launched the Uninsured Americans Program to help provide some hope. According to U.S. Census figures, 41 million Americans were without healthcare insurance in all of 2001, up 1.4 million from the previous year, and over half of all uninsured Americans are Asian (18%), African-American (19%) or Latino (33%). In addition, eight out of 10 uninsured people in the United States are from working families. A recent survey of Small Business Councils has also found that 50% of employers polled reported that rising healthcare costs were reflected in either layoffs or decisions to not hire additional staff. “We estimate that anywhere from 10 to 30% of public- and private-sector employees in the Inland Empire can qualify for this program,” said Arrowhead CU President/CEO Larry Sharp. “This program is especially important now because it essentially provides a safety net for employees who are most at risk during the current health insurance crisis. We also hope it will provide some relief to local hospital emergency rooms, which are being overwhelmed by patients who lack health insurance coverage.” Administered through the credit union’s Sawyer, Cook & Co. affiliate, the program offers uninsured and underinsured working families across Riverside and San Bernardino counties who earn less than $30,000 per year or have a combined household income of less than $35,000 affordable health insurance through major carriers. The program, which is funded through earned income tax credits, was developed during the past 18 months by a team of insurance and risk management specialists overseen by the credit union’s CUSO Arrowhead Financial Group. Employers signing on for the program can reduce insurance costs by as much as 50%, while employees who qualify can save up to $128 a month, depending on their income. “We talked about a way to do something for the community which is mainly blue collar workers and single parents. It is very difficult for employers to pay benefits for employees and their children. Five years ago employers could do it but not now,” said Arrowhead Financial Group President Jim Estes. “So we worked with a lot of people and groups including Sawyer Cook & Company and the IRS to develop a way to help employers fund health insurance programs.” The program works by employers taking an “advance” on employees earned income tax credits. To further reduce premiums the employer can choose from a combination of other cost saving moves including offering higher deductibles, providing medical GAP coverage, and using a 125 plan. “The program runs parallel to existing health insurance plans and some people will be able to get insurance at no cost to themselves,” said Estes. “For others the cost will be virtually nothing.” The key to the program running smoothly is the CUSO establishing itself as a third party administrator. “You have to form your own TPA, because you’ve got to be able to control the flow of information-you lose that if you farm it out,” said Estes. Being a TPA also gives the CUSO more room to negotiate. For example, take a credit union that spends $1 million a year on health insurance and everyone has a $100 deductible. With the CUSO as a TPA it can advise the credit union to take on $250,000 in claims with the TPA administering the claim with the provider. Then the TPA can go to the provider and ask that premiums be reduced to $500,000 since it is only paying the claims forwarded by the TPA – the credit union’s net savings amounts to $200,000 to $250,000. Estes says the program will also provide small businesses here with more health insurance options particularly with the recent passage of California Senate Bill 2, which requires companies to shoulder 80% of the cost of their employees insurance coverage. “That bill will kill a lot of small businesses here,” said Estes. “Everyone wins. The employer can provide great benefits and the employees have access to affordable health care. For us, this is a way to make a difference in the community while expanding the SEG market.” So far some 35 people have signed up for the program and about seven of the businesses that signed up have also asked the CUSO to write all their insurance coverage. [email protected]