It had relatively few HMO members, no dominant managed-care company, and a rapidly growing population. But the market quickly turned treacherous. Leading HMOs started selling insurance at discount rates, triggering a price war and mounting losses. Foos said AmeriHealth of Texas fell victim to the competition. It's fair to say the performance of the company .
Local observers say the company was also crippled by difficulties paying claims.
It priced its plan below what competitors were charging in order to build membership, and then could not handle the rush of customers, said David Dross, who advises employers on benefits as a senior consultant in Houston for William M. Mercer, a health-care consulting firm. The results were incorrect bills and late payments. In May, Independence struck a deal to sell the subsidiary for an undisclosed sum to AmCareco Inc. of Houston. Independence went into Florida in March 1998, when its AmeriHealth holding company purchased an Anthem health plan based in Jacksonville. As in Texas, AmeriHealth wooed employers with low rates, offering premiums 10 percent to 15 percent lower than competitors', said Ken Smith, a benefits broker in Jacksonville who sold AmeriHealth insurance to employers.