TRIBUNE CONTENT AGENCY Published 4:24 p.m. CT Oct. 15, 2017
UnitedHealthcare’s move to sell more coverage
in Minnesota starting next year could help keep a lid on health insurance
premiums in the region, at least in the near term, analysts say.
Minnetonka-based UnitedHealthcare, which is
the nation’s largest health insurer, said last week it plans to start selling
coverage to small-, mid- and certain large-employer groups in Minnesota over
the next year, plus a new type of Medicare health plan.
Lower premiums at the outset “are a realistic
expectation,” said Rulon Stacey, a managing director with Navigant Consulting,
who expects longer-term changes, as well.
“It’s inconceivable to me that it will not
have a major impact on the market here,” said Stacey, who is the former chief
executive at Minneapolis-based Fairview Health Services. “It’s a very, very big
deal.”
UnitedHealthcare’s parent, UnitedHealth Group,
is the largest publicly traded company in Minnesota, and is on track this year
to post $200 billion in annual revenue for the first time. It employs about
18,000 people in the state, but has been a relatively small player in the
state’s health insurance market.
UnitedHealthcare has been absent from the market
where small and large employers purchase “fully insured” coverage, meaning
insurance companies take the financial risk for claims. Last year, about
967,000 Minnesotans were covered through fully-insured plans for small and
large groups, according to the state Commerce Department.
UnitedHealthcare also has been absent from
Minnesota’s market for Medicare health plans, although it sells prescription
drug plans and supplemental policies in the state. In 24 states,
UnitedHealthcare has the largest market share among Medicare Advantage
insurers, according to a report this year from the Kaiser Family Foundation,
and the company is among the top three sellers of Medicare plans in another 19
states.
For the largest employers in Minnesota,
UnitedHealthcare has had a presence in the state’s insurance market for many
years. The insurer has worked as a third-party administrator to large
“self-funded” employers, meaning groups that take the financial risk for the
cost of employee medical claims.
Large employers based in other states with
operations here have provided UnitedHealthcare benefits to workers in
Minnesota. Plus, for very large multistate employers based in Minnesota,
UnitedHealthcare has worked as a third-party administrator in conjunction with
Minnetonka-based Medica, using the local nonprofit health plan’s network of doctors
and hospitals.
UnitedHealthcare and Medica have collaborated
not only on national accounts, but on United’s employee health plan in
Minnesota. In addition, Medica obtains such certain back-office services as
claims processing from United.
“The relationship with Medica is really not
changing,” said Philip Kaufman, the UnitedHealthcare executive leading the
expansion in Minnesota, as well as North Dakota and South Dakota. “What’s
changing is us coming here directly, but Medica and United are going to
continue to be great partners.”
The situation, however, raises questions in
the minds of some observers.
“I would not understand why, if you had 18,000
people in your group, that you wouldn’t be trying to use that potential volume
to drive a better deal with health care providers,” said Christopher Ody, a
health economist at Northwestern University in Evanston, Ill.
Roger Feldman, a health economist at the
University of Minnesota, said one of the key questions going forward is: “How
long do they keep working with Medica?”
The companies last week offered only limited
responses to questions about whether UnitedHealthcare’s announcement signals a
change in the business relationship, which at times has been described as a
“noncompete” agreement.
Insurance cards for UnitedHealth Group
employees in Minnesota list Medica’s name, a spokesman confirmed, adding that
the “announcement will not affect the benefits we offer to [Minnesota-]based
employees today or in 2018.”
“Health care markets around the country
continue to evolve rapidly, with competitors entering and exiting on a regular
basis,” Medica said in a statement. “Minnesota is in some ways unique, because
its health plans have been almost entirely nonprofit.”
UnitedHealthcare isn’t the only for-profit
company looking to enter Minnesota’s insurance market.
Earlier this year, Connecticut-based Aetna
announced a collaboration with Minneapolis-based Allina Health System to create
a new for-profit insurer that would sell to large-employer groups starting next
year. Like UnitedHealthcare, the Aetna-Allina joint venture plans to sell
Medicare Advantage plans in Minnesota starting in 2019.
Both companies say a forthcoming regulatory
change with what are called “Medicare Cost” plans helps explain the timing.
Most Minnesota insurers sell Cost plans, but beginning in 2019 they can’t be
sold in service areas where two or more sizable Advantage plans are offered.
Feldman of the U said UnitedHealthcare would
“shake up the market” when it comes to Medicare plans. He added that
UnitedHealthcare is taking a risk, though, because efforts at the federal level
to “sunset” the Cost plans have repeatedly been delayed over the years.
More broadly, Feldman said he expected
UnitedHealthcare in Minnesota would compete aggressively with lower premiums.
Minnesota lawmakers in 2017 eliminated the
state’s decades-old ban on for-profit HMOs in hopes of boosting competition in
the insurance market. The ban was a bigger deal to carriers back in the 1990s
when many commercial customers wanted HMO coverage. Over the years, however,
many commercial customers have shifted away from HMO coverage, buying policies
from for-profits that are allowed to operate in Minnesota with licenses as insurance
companies.
Even so, the big for-profits have shied away
from the Minnesota market — until now.
“For years and years, we’ve been speculating
about what might happen if for-profits could come into the market,” Feldman
said. “Now we seem to have one sort of alliance forming, with the Allina-Aetna
alliance. And we also have UnitedHealth Group entering, which has been the
biggest missing piece for many years.”
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