MOUNTLAKE TERRACE — Premera Blue Cross is pledging to spend $250 million over the next five years in Washington and Alaska to stabilize the individual insurance market, improve access to health care in rural areas and support behavioral health initiatives.
The insurance company is using a one-time refund from the Republican tax cut passed in December to pay for these efforts.
Everett’s Cocoon House will be one of the first beneficiaries of this windfall. Premera is giving the nonprofit a $1.6 million grant for the final piece of funding for its Colby Avenue Youth Center in Everett.
The company was looking to support a program such as Cocoon House that offers housing and support for teens and young people who are homeless, said Paul Hollie, who heads Premera’s corporate philanthropy program.
“One of the best examples we could find, bar none, is what’s going on in Everett with Cocoon House,” Hollie said. “We feel the Cocoon House partnership allows us to help young people as they go through that struggle with homelessness in their lives.”
Premera learned in the past few months that it would receive $390 million as a one-time refund as part of the tax cut. The company hasn’t decided how to spend the remaining $140 million of the refund. That’s in addition to a lowering of the federal corporate tax rate from 35 percent to 21 percent.
Many companies are using the tax break to increase shareholder dividends or buy back stock. Premera is a nonprofit corporation and the only major health insurer headquartered in Washington. So it decided to spend $250 million of the refund on improving health care in Washington and Alaska.
“We’re very different from a for-profit company,” said Steve Kipp, vice president of corporate communications. “We don’t have to worry about shareholders, we don’t have to worry the stock price or dividends and those types of things. We wanted to give that amount away because we felt it was consistent with our mission.”
The company will also be awarding its employees with a one-time, $1,500 bonus. The company employs 2,600 at its campus in Mountlake Terrace.
Premera, along with other health insurers, were allowed to gather tax credits after a federal tax reform package in 1986, said Mike Kreidler, Washington’s insurance commissioner.
Premera never used those tax credits over the years, but, with this most recent tax legislation, the company was required to cash them in, bringing the sudden windfall, he said.
“I think it’s what many of us can choose to do when we get a windfall financially to look around and say, ‘How can we make the system better?’” Kreidler said. “I think they have a real opportunity to enhance their position in the state of Washington going forward with the investments they choose to make.”
Premera is planning to focus spending on three areas: customers and market stability; improved access to health care in rural areas; and behavioral health.
As for the first area, Premera has told state regulators in Washington and Alaska that it will commit to serving the individual market through 2019. The individual market includes people who are buying insurance on their own and not through their employer.
The majority of people in the individual markets of both states are receiving subsidies through the Affordable Care Act — about 60 percent of individually insured people in Washington and 90 percent in Alaska, Kipp said.
The number of health insurers who offer health plans has dwindled in the two states. Last year, there was concern that some counties in Washington would be left without any health insurance choice.
Premera is pledging that no county in Washington state will be left without an insurance choice.
And Premera intends to send $10 million to some large employers as a rebate.
The second area that Premera wants to address is rural health care. The company wants to create initiatives to attract and support health providers in rural parts of the two states and to offer enhanced telemedicine and telepsychiatry. Those programs include the remote diagnosis and treatment of patients through telecommunication programs.
The third area is to support treatment of such behavioral health issues as addiction and difficult childhoods with a focus on homelessness. Premera is making a $40 million commitment in the two states over the next five years.
“We see homelessness as a health care issue,” Kipp said. “If you can get people off the street, you’re increasing their life expectancy dramatically, but you’re also reducing the overall cost of care dramatically as well. They’re going to emergency rooms, they’re waiting until the last minute, that’s really expensive.”
One of the first grants will be to Cocoon House, which is building a 33,000-square-foot expansion at the former United Methodist Church at 3530 Colby Ave. in Everett. Cocoon House had raised $12.6 million for the new center but was $1.6 million shy of the money needed.
“It’s amazing to me,” said Joe Alonzo, interim CEO of Cocoon House. “I feel like I’m in a dream.”
The grant will allow Cocoon House to schedule a ceremonial groundbreaking later this month and begin construction in June with an opening in June 2019.
Premera learned only recently that it would receive a refund, Kipp said. The money will be delivered to the company over the next four years, which gives it time to determine how best to spend it.
“We need to be very thoughtful about how we want to spend all of this money,” Kipp said.
Jim Davis: 425-339-3097; email@example.com; @HBJnews.