Jan

How workers comp and group health differ…

Posted by Joe Paduda on Tuesday, January 19th, 2010 | Comments

I’m often asked how and why workers comp and individual/group health differ; the question comes primarily from investment and private equity firms, managed care vendors, and pharma.
The question is both simple and difficult to answer, as the follow-on query is almost always ‘why are the two so different, and when is work comp going to ‘catch up’?
First, the differences. The biggest difference is in the type of coverage; WC involves both medical and wage replacement while individual/group is only concerned with medical coverage. Of course, individual/group health is far larger in terms of dollars, as WC premium and equivalents are around $80 billion while individual/group health is more than ten times that at $840 billion.
Work comp:
– Regulated by states and mandatory in every state except TX
– Only covers injuries/illnesses occurring during or arising out of the course of employment
– Return to Work is critical
– The insurer owns the claim forever…or until the claimant is back to work, the claim has been settled and/or has reached maximum medical improvement
– Mix of injuries and illnesses is different, mostly Musculoskeletal/orthopedic, trauma and some cardiovascular (public safety in a handful of states
– Coverage is “first dollar, every dollar”; No copays, coinsurance, or deductibles, and no caps
– Drug “Formularies” tend to be fairly open
– Provider types – Occupational Medicine, Physiatry/PM&R, Orthopedics, Neurology, Neurosurgery, General practice
– Relatively few physicians handle most WC cases; 65% of claims in CA handled by 2.2% of physicians (<900 physicians) (source CWCI) - Comp docs only treat the occupational injury, NOT the 'whole person' Individual/Group health:
– Not mandatory or required by law
– Regulated by states (fully insured) and/or Federal government (ERISA)
– Covers all types of injuries and illnesses
– Wide range of provider types
– Physicians treat the ‘whole person’ for all conditions and co-morbidities
– Unconcerned about Return to Work
– Covers treatment delivered during the policy year only
– Employs cost sharing and seeks to affect patient behavior via deductibles, copays, coinsurance
– Drug formularies are dictated by payer and PBM, can be highly restrictive
As to the ‘why’, that’s a longer answer. The question usually assumes work comp is somehow ‘behind’ the group/individual world in terms of care management, reimbursement, and overall sophistication – a view not without some justification. However, the individual/group health world would benefit greatly from the emphasis, if not sole focus, on functionality that pervades and drives work comp medical care, a focus that is sadly lacking in the non-work comp world.
That said, some of the medical management approaches used outside of comp would certainly help address medical cost drivers – some form of financial incentive for claimants, more intelligent disease management and use of expert networks, tighter formularies and much, much more use of clinical guidelines would be a great help (if used appropriately).
Some will never happen – financial incentives for claimants is probably the most obvious example. And for good reason – WC covers employment-based issues, and requiring the employee to pay for care for a condition incurred as a result of employment would be a non-starter in pretty much every state.
What does this mean for you?
Group could learn a lot from comp; and comp still needs to learn more from group.

Jan

How to change health behavior

Posted by Joe Paduda on Monday, January 18th, 2010 | Comments

I’ve been working with a mid-sized self-insured employer on their health benefits plan; they got hit hard with costs from diabetes last year and the (relatively thin) data available suggests it’s going to get worse in the near future; there are many more individuals at high risk for diabetes (among other ills). If they don’t do something to reduce their employees’ risks, their costs are going up, and fast.
While muddling thru the data, we all agreed that if we all exercised, maintained a reasonable weight, ate healthy foods and amounts, drank in moderation, and didn’t smoke, their costs would be much lower; heck, as a nation there’d be no health care financial crisis.
Good luck with that.
Alas, we’re getting fatter, lazier, and many of us are getting sicker as a result. With so much of our health care budget spent on lifestyle-driven diseases, it’s increasingly obvious that getting people to change behaviors – stop smoking, reduce their drinking, get off their duffs and get out for a walk/ski/cycle – would go a long way to reducing expenses.
So I’ve been investigating motivational techniques and results, looking for ways to help my client get their employees to make long term commitments to healthy behaviors/ There’s been lots published about this; Employers try to motivate healthy behavior by paying for gym memberships and smoking cessation, reducing premiums for employees who earn points for maintaining healthy weight levels, and hire fitness and health promotion experts to staff their wellness centers. These efforts have had some positive effect, but only on the margins.
Turns out the positive, reward-based motivation may well be misdirected. Instead of rewarding people for good behavior, the evidence suggests that penalizing them for ‘bad’ behavior by taking something away is much more effective.
Here, from a brief piece in The Economist:

In a new paper Tanjim Hossain of the University of Toronto and John List of the University of Chicago explore a real-world use of these insights. The economists worked with the managers of a Chinese electronics factory, who were interested in exploring ways to make their employee-bonus scheme more effective. Most might have recommended changes to the amounts of money on offer. But Mr Hossain and Mr List chose instead to concentrate on the wording of the letter informing workers of the details of the bonus scheme.
At the beginning of the week, some groups of workers were told that they would receive a bonus of 80 yuan ($12) at the end of the week if they met a given production target. Other groups were told that they had “provisionally” been awarded the same bonus, also due at the end of the week, but that they would “lose” it if their productivity fell short of the same threshold.
Objectively these are two ways of describing the same scheme. But under a theory of loss aversion, the second way of presenting the bonus should work better. Workers would think of the provisional bonus as theirs, and work harder to prevent it from being taken away.
This is just what the economists found. The fear of loss was a better motivator than the prospect of gain (which worked too, but less well). [emphasis added] And the difference persisted over time: the results were not simply a consequence of workers’ misunderstanding of the system.

What does this mean for you?
For managed care companies and employers, think of basing benefits on a plan with relatively modest employee coinsurance/contribution level, adjusted upwards for failure to comply with health standards. Yes, there will be complaining about what constitutes lifestyle issues v genetics, and how it may be unfair to penalize this or that lack of compliance, but while you’re dickering around with these points, your costs are continuing to escalate.

Jan

What does the future hold for IntraCorp?

Posted by Joe Paduda on Tuesday, January 5th, 2010 | Comments

CIGNA has a new CEO, David Cordani, who is planning on growing the company internationally.
Which may, or may not, have implications for CIGNA’s IntraCorp subsidiary.
IntraCorp, the managed care subsidiary of insurance company CIGNA, was perhaps one of the first ‘managed care’ firms, and certainly was the first major work comp managed care company. In business for almost forty years, the company evolved from a field case management vendor to a supplier of bill review, networks, case management, physician peer review, and ancillary service to the work comp market.
While it is still one of the larger case management vendors, IntraCorp lost considerable business over the last decade as ESIS and other large clients moved their bill review business elsewhere, claims frequency declined (reducing the need for case management and UR), and competitors aggressively pursued IntraCorp’s core case management, UR, and peer review business.
Although several investors reportedly inquired about the possibility of buying IntraCorp from CIGNA, former CEO Ed Hanway reportedly refused to consider a sale. Hanway’s lack of interest may have been driven at least in part by IntraCorp’s contribution to CIGNA’s corporate overhead. While CIGNA could have sold the subsidiary any number of times, by doing so it would have to find some other entity to absorb overhead expenses on an ongoing basis, a move that would have led to changes in financial reporting and expense allocation.
Now that Hanway has retired, Cordani may revisit the question. With his stated desire to expand CIGNA internationally, the new CEO is going to have to find capital to fund that growth. While IntraCorp is no longer the preeminent company in the work comp managed care space it has a strong brand, good management, and a wealth of data that could be used for any number of purposes (picking good docs, identifying appropriate patterns of care based on diagnoses…).
That and the renewed interest on the part of private equity firms in the comp managed care business may be a confluence of factors that results in CIGNA revisiting the long-term role of IntraCorp.
What does this mean for you?
More change (possibly) in the what’s becoming an increasingly dynamic business equals more opportunity.

Nov

Your drug costs are going up…

Posted by Joe Paduda on Monday, November 16th, 2009 | Comments

The chances of some variety of health insurance reform passing are looking more likely and big pharma is getting ready.
By raising branded drug prices nine percent (so far) this year., and this at a time when the Consumer Price Index fell by 1.3%.
You may recall the big press event when pharma and the White House announced their ‘agreement’ whereby pharma would agree to not fight reform in exchange for reductions of about $8 billion a year in pharma costs. That deal is either off the table, or it wasn’t carefully enough crafted on the front end, because drug companies have been steadily raising prices for brand drugs this year, evidently in anticipation of big changes in the future. In fact, it looks like the increase so far this year more than compensates for the agreed-upon ‘cuts’ announced earlier.
Readers will remember the last time drug prices jumped significantly was just after the Medicare Part D program went into effect, when the largest quarterly increase in years just happened to coincide with the beginning of the program.
There are political as well as practical implications of these price increases. From a political perspective, pharma may be doing to itself exactly what healthplans did with the disastrous release of the PwC ‘report’. Health plans thought they had a deal with the Administration, only to infuriate the White House and Congressional Democrats with the flawed and incomplete ‘analysis’ (even though the concept was right and conclusions accurate, the presentation killed any chance of objective consideration).
With the release of this analysis, Congressional Democrats have yet more evidence of the profit-driven mentality that many believe is directly responsible for our dysfunctional health care system. Do not be surprised if the reaction from Congress is loud, fast and brutal.

What does this mean for you?
This is more of an issue for group and Medicare/caid operations than for workers comp, as comp has a greater percentage of generic fills. But there’s no doubt all payers’ drug costs are going up significantly this year.
If you’re a PBM, get ready to explain higher drug prices.

Nov

Health plans, stock prices, and reform

Posted by Joe Paduda on Thursday, November 12th, 2009 | Comments

There are some things I just don’t get. Bungee jumping, the Ruta de los Conquistadores, body piercing are near the top of the list, just under equity investors’ reactions to health reform.
And it doesn’t look like my health investor puzzlement is going to end any time soon.
Several news items collided in my inbox this week; passage of the House reform bill and multiple analyses thereof; a report that health plans’ medical costs and profitability are worsening, yet many health plan stocks are selling close to their 52-week highs. Huh?
Let’s start with the health plan medical cost report. The good folks at Mark Farrah and Associates published an analysis that, among other things, noted:
– the top eight health plans (covering 59% of the nation’s total insureds) lost 836,000 members in the first half of 2009
– commercial membership was down 1.45 million while MA and Medicare Supplement was up 405,000
– Medical costs are trending higher, and medical loss ratios are as well
The net – profitability has declined, costs are increasing, and membership is dropping. Yikes.
Now, investors don’t seem too worried about these trends. In fact, as of this morning, they seemed to be enamored with the health plan sector as stock prices are up over nine percent over the last month, compared to an S&P that’s just over flat.
Next, health reform and the recent House and Senate bills. What I see that’s scary is the lack of a strong mandate coupled with an end to most underwriting of medical coverage means people can sign up for health insurance when they need it, stop paying premiums when their care is completed, and then re-up if and when they need care again.
Let’s call this the Massachusetts Problem, after what’s been happening to health plans there.
This isn’t conjecture or theory. It’s reality, and it is taking place in a market with a much stronger mandate than the one in the Senate Finance bill.
Finally, a few selected statements from stock analyst types:
– “There were two recent developments of particular concern to WellPoint investors, since the company is a relatively big player in the small-employer and individual markets. First, the Senate Finance Bill included strict insurance market reforms but a weak individual mandate, which could lead to adverse selection, higher premiums, and a smaller market for individual and small-group policies.” (Morningstar) Yet Morningstar rates WellPoint a five-star stock
– They also may not be hurt as badly by a federal health care overhaul as many analysts first worried. Congress is debating ways to cover the uninsured and reduce costs, and health insurance stocks have been sensitive to this debate for months. Shares sank at the start of the year when the reform debate picked up steam, but they have recovered for the most part as the threat of a strong public option that would compete with insurers faded. A possible tax on insurers based on their market share remains a concern. But overall, analysts say the sector remains on sound footing heading into the next few quarters. [notice no discussion of the impact of the end of underwriting coupled with a weak or nonexistent mandate…perhaps it was edited out] istockanalyst
– “I think they’re getting a really bad shake in the current environment,” FTN Equity Capital Markets analyst Peter Costa said. “But the core businesses are there.” istockanalyst
United Healthcare is also a top rated stock, and is trading near its 52-week high.
Analysts may say health plans are somewhat insulated from the individual market, where the underwriting issue is really problematic. True, but as more companies drop their group plans (a multi-year trend that has accelerated this year), the size of the individual market will grow – and health plans will have to get into or expand their offerings in that market if they are going to increase revenues (a mandatory requirement for publicly traded companies).
So here’s where this all leads. Without a strong individual mandate, health plans are going to lose buckets of money insuring people after they get sick. How that translates into a 52-week high is beyond me.
Disclosure – I’ve sold all my health plan stock holdings and don’t have any financial interest whatsoever in the sector. Not because I don’t think there are some good companies out there in the healthplan business (Aetna’s probably at the top of the list), but because provisions in the two health reform bills will kill off the entire industry.

Oct

Syracuse University – the new home of UCR

Posted by Joe Paduda on Friday, October 30th, 2009 | Comments

We now know who will replace Ingenix as the nation’s provider of usual, customary and reasonable (UCR) data; we also know when (by the end of 2010). As to the how, that’s a bit less certain.
Syracuse University will be the home of a non-profit data house’ to be called FAIR Health (Fair and Independent Research Health); Cornell, Upstate Medical Center, SUNY Buffalo, and the University of Rochester will also contribute (got to spread the largesse around). (full disclosure – Syracuse is my alma mater)
The new entity will be funded at least in part by the $100 million NY Attorney General Andrew Cuomo has gotten in settlements from Ingenix’ UCR database customers. In addition to Cuomo’s successes, Ingenix’ parent company, UnitedHealth Group paid $350 million earlier this year to settle a class action suit, and other legal action is continuing which Cuomo expects to add to the $100 million total. The cash will be used to develop the database and set up a mechanism to deliver data to payers and consumers via a website. This last is a great idea – providing health care consumers and providers with access to UCR data should help promote transparency and enable price comparisons by consumers and price competition by providers.
FAIR will be headed up by SU Professor Deborah Freund, an expert in health economics, Distinguished Professor of public administration and economics in SU’s Maxwell School and Senior Research Associate at Maxwell’s Center for Policy Research. Dr Freund has a wealth of experience on the academic side of health policy and economics and has published on a wide range of topics in those fields.
I’ll see if I can stop in for a chat when I’m back up on the Hill in January for another alumni meeting.
The timetable seems…aggressive – there’s a lot to do to avoid some of the problems that plagued Ingenix’ MDR and PHCS databases; non-existent quality control on source data and inadequate volume of data in some areas are just two of the problems that led to the settlements. While Freund et al at FAIR may want very much to provide comprehensive, clean data that covers all procedures delivered by all providers, they don’t control the quality, accuracy, and consistency of the data collected by health insurance companies and other payers. And after the Ingenix debacle, they sure want to be absolutely positively comfortable with their data before they release it to the public.
My guess is the website and initial data will be up and running by the end of next year, but it won’t be comprehensive. Even if FAIR is able to come up with standards and a rigorous QA process, it will take more time for payers to develop and implement processes to ensure the data they provide FAIR meets those standards.
And you can bet your last hundred million that no payer is going to send data they aren’t absolutely sure is up to snuff.
What does this mean for you?
Good news, as the new UCR provider will help reduce payers’ exposure.
Health plans have a new vendor to work with – on the vendor’s terms.
Over the longer term, there’s another ‘outcome’ – Health data quality is about to go under the microscope, and the view may be pretty ugly. Healthplans and other payers may well have to upgrade their technology, training, and staffing to meet FAIR’s demands
Background
For those who don’t follow these things on a daily basis (hard to believe I know), some background. Years ago, the health insurance industry’s lobbying and service arm (HIAA) aggregated and compiled physician charge data as a service to its members. HIAA collected the data and fed it back to members, who then used the data to determine how much they should pay providers in specific areas for specific services (services defined by CPT codes). HIAA was taken over/disappeared about a decade ago, and Ingenix took over the aggregation and distribution of the data, which has become known as “UCR” for “Usual, Customary, and Reasonable”.
For about ten years, all was fine, at least as far as most insurers were concerned. Sure, physicians complained at times and consumers railed about the low reimbursement paid by companies citing their UCR, but the complaints didn’t really make any difference until Cuomo got involved. The problem arose when a few folks in New York complained about the amount they still owed providers after their insurers had paid their portion – according to Ingenix’ UCR. After a lengthy investigation, Cuomo found reason to charge UHC and other insurers, and that action ultimately resulted in this settlement.

Oct

Anti-trust and the Health Insurance Industry – what’s this all about?

Posted by Joe Paduda on Monday, October 19th, 2009 | Comments

Last week the Senate Judiciary Committee held an initial hearing aimed at removing some of the health insurance industry’s anti-trust exemptions. The hearing, entitled “Prohibiting Price Fixing and Other Anticompetitive Conduct in the Health Insurance Industry”, may be a reaction – at least in part – to the health insurance industry’s public (and private) assault on health reform legislation.
And over the weekend, President Obama added his considerable weight to the call for a review of the industry’s anti-trust exemptions.
To be sure, AHIP’s public slam of the Senate Finance Committee did nothing to strengthen relations with Democrats, and the hearing, (although put on the Committee’s schedule on October 2, well before the AHIP report was released), was a fine opportunity for Senators outraged by AHIP’s action to up the ante.
Like pretty much everything having to do with health insurance and reform and Washington, this isn’t simple, and I certainly don’t pretend to understand the details. But as near as I can make it out, here’s what is causing heartburn among some.
Here’s Julie Barnes’ synopsis: “There are three sets of laws involved here; 1) the federal antitrust laws; 2) the state laws that regulate the insurance industry; and 3) the federal law passed in 1945 called the McCarran-Ferguson Act. The antitrust laws promote competition, and states have a long tradition of regulating insurance practices for their citizenry. The McCarran-Ferguson Act doesn’t regulate insurance or prohibit certain anticompetitive behavior, but it does allow federal and state governments to regulate insurance and makes clear when antitrust laws do and do not apply to the insurance industry.”
The issue is the industry’s exemption from the McCarran-Ferguson antitrust laws (which is under the Judiciary Committee’s purview). Providers have long contended that it is unfair for the payers to be exempt from these laws when providers are not; this, providers contend, is unfair. I’m not sure I buy that argument, as provider consolidation has been continuing regardless of the regulatory environment, and the negative effects of that consolidation were clearly illustrated in the Boston Mass market.
McCarran-Ferguson exempts insurance industry activities that: (a) constitute the business of insurance; (b) are regulated by State law; and (c) don’t constitute an act of boycott, coercion, or intimidation. According to Barnes, the crux is the ‘business of insurance’ standard – and the Supreme Court has set up a test to determine if an activity is the business of insurance – (1) whether the activity has the effect of transferring or spreading a policyholder’s risk; (2) whether the activity is an integral part of the policy relationship between insurer and insured; and (3) whether the activity is limited to entities within the insurance industry.
Over the years, the exemption has been tightened considerably – in particular mergers and acquisitions and provider contracting activities are generally not exempt, so anti-trust laws and regulation apply.
So what happens if Congress repeals the exemption? Way too early to tell, but undoubtedly even the whisper of this possibility is most unwelcome in health plan executive suites.
If you look at market concentration, there’s no question the health insurance industry is not exactly competitive; 94% of insurance markets are ‘highly concentrated’. Here are a few factoids using 2005 data; if anything there has been more market consolidation, so these percentages are even higher today…
– in 96% of markets, at least one insurer has share higher than 30%
– in almost two-thirds of the markets, one insurer has share greater than 50%
– in a quarter of the markets, one insurer has share at or above 70%
But repealing the industry’s exemption is not likely to significantly increase market competition.
Which leads us back to the original question – Why?
My sense is this is a ‘OK, you want to mess with us?’ statement by the Senate Democrats. It is a very loud, and very close, shot across the bow of the industry intended to let them know in no uncertain terms that intransigence will be very, very costly.
What does this mean for you?
Watch to see how AHIP et al react. If they appear somewhat chastened, don’t be surprised.

Sep

Coventry will not be selling its workers comp unit

Posted by Joe Paduda on Monday, September 14th, 2009 | Comments

Coventry CFP Shawn Guertin confirmed the company’s commitment to workers comp in this morning’s Morgan Stanley Global Healthcare Conference, noting comp is a : “[somewhat] different piece [compared to their medicare and commercial business] that has performed very well this year and will continue to perform well and [will likely] grow going forward.”
Guertin’s comment was in response to a question from the moderator about potential asset sales or acquisitions; he noted the sale earlier this year of a specialty Medicaid business before mentioning workers comp. Guertin also said observers should not look for Coventry to sell businesses, as their strategic overhaul under Chairman and CEO Allen Wise is pretty much finished.
I’d note that while there are practical reasons that make a sale of some of all of the work comp business unlikely, the financial returns generated by the business are quite attractive, and serve to balance out the Medicare/Medicaid/Commercial health businesses’ cyclical nature.
From a practical perspective, Coventry will own its bill review code within a couple weeks after an investment reported to be well north of $10 million; would find it very difficult to separate out its workers comp provider contracts from the other lines of business, and its case management and UR units have suffered from the decline in claims frequency. Thus even if Wise et al wanted to sell the work comp business – which they clearly do not – they would find it quite difficult to extricate it from the rest of their operations.
The twenty minute presentation also included comments on Medicare, medical loss ratios and factors affecting the MLR, and Coventry’s strategic thinking concerning health reform.
More on that to come…

Aug

PPO firm Viant acquired by MultiPlan

Posted by Joe Paduda on Monday, August 10th, 2009 | Comments

PPO company Viant (owner of Beech Street and PPONext) will be acquired by larger PPO company MultiPlan.
The announcement came last week; here’s the lead from the internal memo to employees:
“After much thought and deliberation by our Board of Directors and our Executive Team, we have decided to pursue a new chapter in Viant’s long history. Therefore, it is with pleasure that we announce that Viant and MultiPlan have reached an agreement where MultiPlan will acquire 100% of Viant sometime over the next several months.
This decision was not reached lightly. Viant has demonstrated tremendous resiliency over the years, overcoming market and competitive challenges while still growing the business at attractive rates. However, the current U.S. economy and the political momentum around health care reform are very real and represent significant risks. As a result of these challenging and uncertain times, we have considered the most favorable strategic options available to our company that enable us to strengthen our position in the managed care industry and continue to grow. Clearly, economies of scale permit larger companies greater opportunity for growth and cost savings when facing uncertain times.”
The two companies have significant overlap in their PPO networks; both claim five thousand plus hospitals and six hundred thousand plus other providers. It is highly likely the successor organization will pick the best discount deals from either network, giving customers (potentially) larger savings on some bills.
Unsurprisingly, there will be staff reductions; here’s how Viant bosses Dan Thomas and Tom Bartlett put it: “Predictably, as the two companies integrate, downsizing will occur over time where redundant resources and costs are most apparent. We are confident that as this process evolves, the new company will endeavor to retain the most talented and professional employees from both organizations in order to emerge with visibly greater expertise and productivity.
There is no doubt Viant’s team is viewed very favorably by MultiPlan and it is committed to ensuring we achieve this objective.”
So, what does this mean?
Large, broad-based, national PPOs have been faltering of late, as their ability to extract discounts from providers, especially hospitals, has diminished. Over the last few years we’ve seen the PPO market consolidate, with Beech bought by Concentra, First Health take over CCN, Coventry acquiring Concentra and First Health, and Aetna’s purchase of PPOM.
Expect this to continue, but it’s a losing game. PPOs are a cost containment solution that has fallen out of favor. While there will always be a place for them (think out of area coverage, work comp, companies with widely spread workers) they will continue to lose share to more tightly managed networks, vertically integrated systems, and Blues plans.

Aug

Health plans and health reform – not so simple…

Posted by Joe Paduda on Friday, August 7th, 2009 | Comments

The stock prices of health insurers wax and wane with the likelihood of health reform becoming reality – although in inverse. The announcement last month that the outlook for most of the major health insurers had been downgraded to (or remained) negative might be seen as an indication that reform is likely, or perhaps it is more a result of the conservative nature of rating agency Fitch.
Fitch’s analysis makes sense – if a public plan option is passed that includes the ability to force providers to accept Medicare or similar rates, then it will murder the private insurers. But that is just not going to happen. There is zero chance of any reform measure passing that includes a public plan reimbursing at Medicare – or any rates close to Medicare.
The ratings company’s assertion that reform that includes guaranteed issue without mandated universal coverage and/or pricing flexibility and/or underwriting is a bad idea has been convincingly demonstrated in Massachusetts.
That doesn’t mean the industry has substantial risk. But that risk is more resulting from the current economy than the potential problems from health reform. This was confirmed by Mark Farrah & Associates’ report that the top eight plans lost more than four hundred thousand commercial members in the most recent quarter. If anything, the employment picture is a lot more significant for health plans than the much less likely chance of public plans and other ‘maybe’ events. According to Farrah;
“WellPoint and UnitedHealth, the two largest plans in the United States, saw total enrollment declines of 490,000 and 465,000 respectively. The economy and maintaining strict pricing and underwriting discipline were cited as reasons for the declines.”
What Fitch is not adequately considering is the very real opportunity for health plans. The smart ones (a limited population to be sure) will see this as a big chance to gain millions of members. The even smarter ones will quickly move to slash their admin expenses by eliminating underwriting, refining marketing, and investing heavily in population health.
I’d note that Fitch now has awarded all plans the coveted ‘negative’ status; I believe this is misguided, as there are clearly several that are better positioned to take advantage of reform (if it happens). I’d include Aetna in that group; they actually gained 1.4 million members in Q1 2009.

Category: Manage Care – Group Health