Health Plans

Health Care Deals May Slow in 2020, but Government Markets Remain Hot

January 9, 2020

The pace of health care mergers and acquisitions likely will cool slightly in 2020, some industry experts tell AIS Health. Still, insurers are likely to seek out companies with assets such as care management or information technology solutions, while provider consolidation will continue in certain markets.

By Jane Anderson

The pace of health care mergers and acquisitions likely will cool slightly in 2020, some industry experts tell AIS Health. Still, insurers are likely to seek out companies with assets such as care management or information technology solutions, while provider consolidation will continue in certain markets.

“We expect that payer M&A will continue into 2020, with a bias toward vertical rather than horizontal deals,” says Michael Abrams, managing partner of Numerof & Associates, Inc. “Payers will use such deals to expand into adjacent market spaces to differentiate their offerings as integrated platforms that can deliver superior value, customer experience and innovation.”

Joe Paduda, a principal with Health Strategy Associates, says he expects less M&A generally in 2020, for several reasons. “There aren’t as many assets to buy after the multiple deals done over the last few years; buyers are waiting to see results of the elections, which will drive their future strategy; and asset prices have edged even higher, making transactions more expensive and leaving less margin for error.”

Dan Mendelson, the founder of consulting firm Avalere Health, says he still sees plenty of potential targets for horizontal mergers, along with more targets for vertical deals.

“Health plans are in a transformative phase right now. There are three major areas of focus: government markets, care management, and the information technology needed to support quality improvement and cost reduction,” says Mendelson.

“In government markets, there are a range of quality assets that the larger plans could still acquire,” he adds. “There are also some non-profits that could engage in collaboration with for-profit organizations to expand their scope and reach.”

Medicare Advantage plans will be “a very strong target for M&A” in 2020, says Ashraf Shehata, KPMG’s national sector leader for health care and life sciences.

Shehata says he also expects insurers to “amass capabilities around their PBMs.” This, he says, could include bolstering their specialty pharmacy capabilities and building out technology.

Datapoint: Rhode Island Implements Insurance Mandate

January 7, 2020

Rhode Island’s statewide individual insurance mandate, which requires residents to have minimum essential health coverage or face a tax penalty, went into effect on Jan. 1. About 1.03 million Rhode Island residents currently have full medical coverage, according to the latest update to AIS’s Directory of Health Plans. Based on 2019 U.S. census estimates, just 3-4% of Rhode Islanders are uninsured.

Rhode Island’s statewide individual insurance mandate, which requires residents to have minimum essential health coverage or face a tax penalty, went into effect on Jan. 1. About 1.03 million Rhode Island residents currently have full medical coverage, according to the latest update to AIS’s Directory of Health Plans. Based on 2019 U.S. census estimates, just 3-4% of Rhode Islanders are uninsured.

Source: AIS’s Directory of Health Plans

HealthCare.gov Enrollment Plateau Signals Stability for Insurers

January 7, 2020

Now that the open enrollment period has ended for the 38 states that use HealthCare.gov to enroll people in Affordable Care Act (ACA) marketplace plans, the preliminary sign-up numbers offer relatively reassuring news for the insurers that operate in the individual market.

From Nov. 1 to Dec. 17, 8.3 million people chose or were automatically re-enrolled in health plans on the federal exchange, CMS said on Dec. 20. That’s down just slightly compared with 2019, when total HealthCare.gov enrollment was 8.5 million.

By Leslie Small

Now that the open enrollment period has ended for the 38 states that use HealthCare.gov to enroll people in Affordable Care Act (ACA) marketplace plans, the preliminary sign-up numbers offer relatively reassuring news for the insurers that operate in the individual market.

From Nov. 1 to Dec. 17, 8.3 million people chose or were automatically re-enrolled in health plans on the federal exchange, CMS said on Dec. 20. That’s down just slightly compared with 2019, when total HealthCare.gov enrollment was 8.5 million.

Deep Banerjee, a health care sector analyst at Standard & Poor’s, tells AIS Health that the preliminary 2020 enrollment figures from HealthCare.gov didn’t come as a surprise.

One major reason is that the exchanges have become a heavily subsidized market, and for those receiving subsidies, “it’s highly likely they’ll sign up every year,” he says.

“On the other side, this is kind of the positive [effect] of continuous economic growth in the country — if less people are unemployed, which means they are getting their insurance from the group side, [they’re] less likely to sign up on the individual market,” Banerjee adds.

For insurers, the fact that ACA exchange enrollment has plateaued “is not necessarily positive,” he says, given that carriers would like the market to be growing. However, “flat is definitely better than declining,” Banerjee points out.

Cynthia Cox, vice president at the Kaiser Family Foundation and director for its program on the ACA, says “the Trump administration has had a mix of policies — some that were harmful and some that were helpful for the market.” In general, moves that some worried would have a large negative impact, such as the repeal of the individual mandate penalty, do not appear to have led to a huge decline in enrollment, she notes.

“People being priced out who don’t get a subsidy is still a concern, but generally speaking, the market has been pretty stable for the last couple of years, and it looks like it will continue to be going forward for at least another year,” she adds.

Navajo Nation, Molina Partner on Medicaid Managed Care in New Mexico

January 6, 2020

The business arm of the Navajo Nation plans to contract with Molina Healthcare, Inc., to offer Medicaid managed care as part of a partnership between New Mexico, tribal officials and the insurer.

The program would be the first-ever Medicaid managed care program dedicated solely to the health care, cultural needs and geographic needs of native populations living in the Navajo Nation, according to Molina.
The new managed care plan — which Navajo Nation-owned Naat’aanii Development Corporation hopes to launch in 2020 — could cover up to 75,000 Navajos who live in New Mexico.

By Jane Anderson

The business arm of the Navajo Nation plans to contract with Molina Healthcare, Inc., to offer Medicaid managed care as part of a partnership between New Mexico, tribal officials and the insurer.

The program would be the first-ever Medicaid managed care program dedicated solely to the health care, cultural needs and geographic needs of native populations living in the Navajo Nation, according to Molina.

The new managed care plan — which Navajo Nation-owned Naat’aanii Development Corporation hopes to launch in 2020 — could cover up to 75,000 Navajos who live in New Mexico.

“This is very much led by the Navajo Nation,” says Sandeep Wadhwa, M.D., chief health officer and senior vice president of government programs for Solera Health.

The deal appears to be the first between a managed care company and an organization that is owned by a Native entity, Wadhwa, who is not affiliated with Molina, tells AIS Health. “There is a dimension of self-determination by the tribe and by American Indians that hadn’t been realized previously,” he says.

Under Medicaid, state-contracted managed care plans may be an option for American Indians and Alaska Natives, but this is the first time a tribal nation has contracted with a state Medicaid program, Wadhwa adds.

Approximately 100,000 Navajos live in New Mexico, and around three-quarters of them are eligible for Medicaid, according to the New Mexico Human Services Department (HSD). Navajos experience a heavy disease burden, with a mortality rate that’s 31% higher than the overall U.S. rate, HSD figures show.

If this arrangement with Molina and the Navajo Nation helps to improve health outcomes and reduce costs, there may be other tribes and tribal nations that consider similar initiatives, Wadhwa says.

Effectuated ACA Exchange Enrollment Dipped Slightly in First Half of 2019

December 27, 2019

An average of 10.2 million enrollees had effectuated their health coverage in the individual federal and state-based exchanges for the first six months of 2019, a 0.8% decrease compared with the same period in 2018, according to CMS. Enrollees have to pay the first month’s premium for a health plan to be considered effectuated. The report also showed that the average monthly premium per enrollee for the first half of 2019 was $593.29, down 0.4% compared with the first half of 2018.

by Jinghong Chen

An average of 10.2 million enrollees had effectuated their health coverage in the individual federal and state-based exchanges for the first six months of 2019, a 0.8% decrease compared with the same period in 2018, according to CMS. Enrollees have to pay the first month’s premium for a health plan to be considered effectuated. The report also showed that the average monthly premium per enrollee for the first half of 2019 was $593.29, down 0.4% compared with the first half of 2018. Tennessee saw the biggest decrease, with its average premium dropping from $805.62 in 2018 to $659.62 in 2019. Meanwhile, the average monthly amount of advance premium tax credits (APTC) per eligible enrollee decreased 1.0% to $513.91 in the first six months of 2019.

SOURCE: CMS, as of Sept. 15, 2019 and 2018. Visit https://go.cms.gov/38UC3CM.

Datapoint: Kaiser Dominates Provider-Sponsored Plans

December 26, 2019

Kaiser Foundation Heath Plan and its regional subsidiaries currently serve 32.5% of the provider-sponsored health insurance market. More than 36 million people are enrolled in a provider-sponsored plan.

Kaiser Foundation Heath Plan and its regional subsidiaries currently serve 32.5% of the provider-sponsored health insurance market. More than 36 million people are enrolled in a provider-sponsored plan.

Source: AIS’s Directory of Health Plans