Bright Health CEO Bob Sheehy, Chief Health Officer Tom Valdivia and President Kyle Rolfing. ORG XMIT: MIN1707171636242753 (The Minnesota Star Tribune)

Bright Health, the Minneapolis startup designed for the fast-changing U.S. insurance market, plans to double the number of U.S. markets where it will sell health coverage next year.

The company said Wednesday that it plans to expand to 22 markets in 12 states, including offering insurance products for the first time in Chicago, Cleveland and Orlando.

Bright Health's rapid growth since its founding four years ago "shows that consumers are hungry for a new health care model that is simple, personal and more affordable," Bright Health CEO Bob Sheehy said in Wednesday's announcement. "Our 2020 expansion proves that we are able to deliver a much-needed product to an underserved population."

Bright Health is providing insurance coverage to about 60,000 people in 2019. That makes it far smaller than the major U.S. health plans, all of which insure millions of people each, but also shows how fast it the company is growing, considering that it insured about 10,000 people just two years ago.

The company was founded after the passage of the federal Affordable Care Act, which mandated that individuals without health insurance must pay a tax penalty. The law, and the government-run websites where insurance offerings are sold side-by-side competitively, created a demand for cheaper health insurance and led to the creation of so-called "narrow network" plans that offered lower rates and fewer in-network providers.

Bright Health's model is to establish a relationship with a major health system in a market and then construct a comprehensive network of services around that provider. Bright Health networks often include specialty doctors or independent health sites to make sure they meet patients' and regulators' expectations for adequate coverage.

Congress has since dropped the tax penalty for failing to buy insurance. Meanwhile, Bright Health expanded its offerings to include Medicare Advantage plans, which is a form of Medicare sold by private companies.

The Bright Health networks are the same whether members buy an individual or family plan or a Medicare Advantage plan. Bright Health said it works "hand in hand" with its in-network physicians to improve health outcomes of members, especially those with costly chronic health conditions. The company cited statistics showing its "fully coordinated care" creates lower out-of-pocket costs, fewer readmissions and ER visits, and less duplicative medical tests.

In addition to individual and family coverage and Medicare Advantage plans, Bright Health sells supplemental coverage to cover deductibles and other out-of-pocket expenses for its plans.

So far, Bright Health has attracted $440 million through several private fundraising rounds, with major investors including New Enterprise Associates. Bright Health was founded by three veterans of Minnesota's for-profit health insurance giant, UnitedHealth Group, including Sheehy, who retired as CEO of UnitedHealthcare in 2009.

For 2020, Bright Health plans to begin selling insurance in the following: Birmingham, Ala.; Maricopa and Pima counties in Arizona; Denver and Summit County, Colo.; Jacksonville, Orlando, Palm Beach and Tampa, Fla.; Chicago; Charlotte and Winston-Salem, N.C.; Omaha and Nebraska statewide; Cleveland; Oklahoma City; Greenville, S.C.; and Knoxville, Memphis and Nashville, Tenn. All plans are subject to regulatory approvals. The company doesn't sell insurance in Minnesota.

Joe Carlson • 612-673-4779