Plan exits: An unintended consequence of the ACA?
July 24, 2013 - HealthLeaders-InterStudy
Contributor: AnnJeanette Colwell
Topic:
Health plans, managed care, ACA
The Affordable Care Act was
touted as a way to increase competition among insurers in order to drive
down costs for consumers, as well as provide an opportunity for small to
mid-size carriers to expand their business. However, the recent exit of a
strong regional plan from most of its markets indicates that the ACA could
be having the opposite effect.
Cleveland-based managed care
organization Medical Mutual of Ohio recently announced its plans to exit
the South Carolina, Georgia and Indiana markets in order to focus solely
on its core business in Ohio, citing the requirements associated with the
Affordable Care Act as its reason for leaving. Beginning this month,
Medical Mutual will transition its lives in these states to
UnitedHealthcare, and coverage will end for most beneficiaries on Dec. 31,
2013.
It is not surprising that Medical Mutual has chosen to
prioritize its business in Ohio. Although Anthem tends to dominate in most
states in which it provides coverage, Medical Mutual actually gives Anthem
a run for its money in Ohio. According to HealthLeaders-InterStudy data,
Medical Mutual is the second-largest managed care organization in Ohio
behind Anthem Blue Cross and Blue Shield of Ohio, and the Cleveland-based
health plan has the largest commercial enrollment in the state.
It
is surprising, though, that Medical Mutual would choose to exit its other
markets after employing such a strong growth strategy in the Midwest and
southeastern United States. Medical Mutual has worked hard over the past
few years to significantly grow its enrollment in Indiana. Officials set a
goal to increase enrollment in the state by 30 percent in 2012 and another
40 percent in 2013. The insurer also expanded its provider network in
Indiana, which includes more than 12,000 physicians and 110 hospitals and
the majority of health systems across the state. So it is rather startling
that Medical Mutual would choose to exit the market when it has been
making such strong progress.
It has also expanded its presence in
South Carolina in recent years. Medical Mutual is the second-largest
individual insurer in the state, and has approximately 37,000 lives
statewide (HealthLeaders-InterStudy data). Med Mutual entered the South
Carolina market when it acquired Columbia-based health plan Carolina Care
Plan, which had been suffering financially, for $11 million in 2007. The
MCO then purchased the Columbia-based Premier Health Systems plan in 2008.
Medical Mutualfs decision to exit South Carolina will further consolidate
the health plan sector in the state. Aetnafs recent acquisition of
Coventry and the transition of Medical Mutualfs lives to UnitedHealthcare
decreases the number of managed care organizations in the
already-consolidated South Carolina market.
If a strong regional
health plan like Medical Mutual, especially one that has spent significant
amounts of capital and resources over the past decade expanding its
geographic reach, is choosing to focus only on its strongest markets
because of the requirements of the Affordable Care Act, might this
indicate an alarming trend? Health plans such as Medical Mutual were
supposed to be motivated by the opportunities presented by the Affordable
Care Act to expand their business and obtain more lives. If these types of
plans are instead pulling back and focusing only on places where they are
already strong, then the ACA could produce the unintended consequence of
decreasing competition in some markets and making the large national
insurers even stronger.
Follow AnnJeanette Colwell on Twitter
@AJColwellLHLI
Posted on: 7/24/2013 11:37:20 AM