HealthPartners announced Tuesday that it is working with a Des Moines-based hospital system to create a new health insurance company to sell Medicare health plans for 2017 in Iowa and Illinois.

The new insurance company will be equally owned and governed by UnityPoint Health, which operates hospitals and clinics in Illinois, Iowa and Wisconsin, and Bloomington-based HealthPartners, which sells insurance across the state and runs hospitals and clinics in the Twin Cities.

Earlier this year, Medica and UnitedHealth Group announced plans to start selling individual policies for 2016 through the government-run health insurance exchange in the Hawkeye state.

The move by HealthPartners and UnityPoint Health comes as more health care providers are getting into the health insurance business, and health insurers are looking to get bigger either through geographic expansion or mergers.

"We think that the unique opportunity of care and coverage together is something that creates new and different choices," said Andrea Walsh, HealthPartners executive vice president and chief marketing officer. "Both of our organizations really believe that … having larger health plan membership is helpful from a size and scale and efficiency standpoint."

The new company will be based in Des Moines and use some of HealthPartners' insurance company infrastructure in Minnesota, where the nonprofit posted about $2.7 billion in premium revenue last year.

Neither HealthPartners nor UnityPoint Health said how much they would invest in the new company, called HealthPartners UnityPoint Health.

They are filing for insurance licenses in Iowa and Illinois, where UnityPoint Health operates hospitals and clinics. The health system is Iowa's largest, with major medical centers in Des Moines and Cedar Rapids, and operates in the western Illinois markets of Peoria and Rock Island.

The new company won't compete in Wisconsin, where UnityPoint Health has a hospital in Madison and a health insurance subsidiary that sells coverage to individuals and employer groups.

Medicare beneficiaries can get coverage through the traditional government health insurance program — often paired with a "Medigap" supplement from a private insurer — or they can receive care through Medicare health plans, a newer form of coverage where private insurers manage care.

In Minnesota, about 53 percent of Medicare beneficiaries are covered through health plans, according to the Kaiser Family Foundation, whereas the share in Iowa is just 14 percent. Iowa's dominant health insurer, Wellmark Blue Cross & Blue Shield, sells Medicare supplemental policies but doesn't sell health plans, which are usually described as "Medicare Advantage" plans.

Troy Caraway, senior vice president with UnityPoint Health, said the health plans often provide "a richer benefit choice for individuals when they're looking at options compared to traditional Medicare."

The opening for Minnesota insurers in Iowa's Medicare market resembles the opportunity in the state's health exchange market, which also has lacked Wellmark.

The new company doesn't currently have plans to compete on Iowa's exchange, but Walsh said: "We certainly will be looking at how do we grow and expand."

Christopher Snowbeck • 612-673-4744

Twitter: @chrissnowbeck