With reserves among not-for-profit insurers — particularly Blue Cross and Blue Shield plans — at record levels, many industry watchers are watching financial results from publicly traded health plans to see if the not-for-profit plans are dumping some money out of their coffers by cutting premiums.
UnitedHealth Group, which was the first managed care company to report third-quarter 2011 earnings, said yesterday that it has seen “some pockets of greater price competition” among fully insured health plans. CEO Stephen Hemsley told investors that “This is not unexpected, given the premium rebate regulations [governing plans’ medical loss ratios] and recent lower cost trends.” But, he added, “We have not seen action among competitors that imply an intention to broadly discharge reserves.” He warned investors that although United would maintain its “pricing discipline,” the increased premium competition “will pressure our membership growth rates in commercial risk offerings in 2012.”
Gail Boudreaux, CEO of the UnitedHealthcare unit, added that the increasing competition “isn't an across-the-board change,” noting that many competitors aren’t engaging in aggressive pricing because they “are dealing with reform implications, rate review and still have to make investments.” “It really is in selected markets,” she said. And although Boudreaux did not identify any companies, she did single out California, particularly “with a few specific competitors.” She also pointed to “some pockets in the Northeast and mid-Atlantic,” but added that UnitedHealthcare has seen aggressive pricing only for certain segments or customers.
Which markets or insurers do you think are most likely to price aggressively? And what impact might that have on the market overall?