Not All Insurance Brokers Loathe Healthcare Reform

February 29, 2012

Without a doubt, the strongest comments I’ve heard in opposition to ObamaCare have come from insurance brokers.  No surprise there.  With the Patient Protection and Affordable Care Act comes health insurance exchanges, which almost certainly will cut into broker business.  And brokers have already seen commission rate cuts as health insurers move to offset reform-related profit pressures.

Yet in working on a soon-to-be-published story for our sister publication ACO Market News on broker impressions of the concept of accountable care, I surprisingly came across one broker and one general agent who are more accepting of reform.

“I support reform,” says David Villar, president of Pacific Coast Benefits (Gilroy, CA), admitting he’s one of the few brokers who does.  “Something has to be done to control cost,” Villar says. 

Dave Mordo, director of small group operations for Walsh Benefits (Fair Haven, NJ), says that “PPACA should not put a broker out of business.” Mordo, who has been a general agent and broker for more than 30 years, admits that “the broker may have to adjust the business model and diversify.” For example, he urges brokers to consider branching into long-term care, individual life and Medicare Supplemental insurance.  “What are you waiting for?” he asks.

Mordo suggests he may be a bit more optimistic because he’s already survived health insurance reform initiatives in New York and New Jersey, which both offer guaranteed issue and community rating.  “Yes, we’re concerned,” especially about exchanges, he says.  But he adds that exchanges will be great for the uninsured.

My personal view is life will be a lot harder for brokers under ObamaCare.  But I still think many will survive because they provide a real service.  When I owned a small business, I used a broker for my company’s health insurance.  It was efficient and convenient — and will continue to be under reform.


Lifetime Healthcare (For All CEOs)

February 21, 2012

The great–home of the nerdy readers of corporate SEC filings–notes the striking number of executive compensation contracts that include lifetime healthcare benefits.  Landec Corp., for example, just agreed to pay healthcare premiums for company chief executive Gary Steele (who makes about $900,000 in cash annually) and his spouse until age 65.  After that, the company will pay Steele and spouse’s Medicare Part B, Part D and supplemental premiums for life.

Health Plan Profits Soar through 6 Months ’11

February 17, 2012

HMOs had a strong first half of 2011, with net income soaring 40%, according to our tally of financial data for 193 health plans in 12 states.  Net margin was 4.2%.  

A turnaround in Massachusetts and big gains in California and Michigan accounted for most of the increase.  Fully funded HMO membership for the 12 states declined 2%—continuing a trend of eroding enrollment.

Complete details are available in the latest issue of Health Plan Market Trends.

WellPoint Fires Sassi. Is Another Shoe About to Drop?

February 13, 2012

Two weeks after WellPoint shares sank 8%—largely because of poor Medicare Advantage results—the company announced it had fired Brian Sassi, who heads up the company’s consumer business unit (Medicare, Medicaid and individual).  Sassi will remain with the company until early March to assist in the transition of his duties.   No replacement was named.

The big question any time a key executive is shown the door is whether the move indicates other problems will come to light—which is probably why the company simultaneously reaffirmed 2012 earnings guidance of $7.60 per share.  The company also says its Medicare Advantage problems are behind it. 

But you can understand why Wall Street is jittery.  Consider the chronology.  The problem with Medicare first surfaced in the middle of last year when the company announced a second-quarter profit shortfall because of adverse selection in its northern California regional Medicare PPO—a product that lost $150 million and which the company has discontinued.  

WellPoint executives said at the time that the problem was confined to California and that it wouldn’t be an issue in 2012.  Now WellPoint says it experienced similar Medicare adverse selection in other states as well—impacting fourth quarter profits.  Again the company says its products are priced appropriately and profits will improve in 2012.

The problem is Medicare Advantage bids for 2012 were submitted in June 2011.  “WellPoint couldn’t have known the Medicare business would perform so badly in the fourth quarter when they submitted 2012 Medicare bids back in June,” notes Carl McDonald of Citi.  He adds, “WellPoint didn’t do a real effective job of explaining why it wouldn’t be a problem in 2012.”

4Q11 Net Income Rises 1% at 8 Publicly Traded Plans

February 9, 2012

Not all publicly traded health plans have reported fourth-quarter financials yet, but the eight that did posted a combined 1% increase in net income at their health insurance operations.  Revenues for the quarter rose about 8%.  For the full year 2011, net rose 5.4%, while revenues were up 7%.  Coventry, Health Net and WellPoint were among the plans posting declines in fourth-quarter net income.  Complete coverage appears in the Feb. 6 issue of Health Plan Market Trends.

Hayden, Kelly, Johnson to Speak on Dual Eligibles

February 3, 2012

Three top managed Medicaid executives will discuss the $300 billion dual eligible opportunity for health plans on Wednesday, April 18, in Washington, DC.  The event is CRG’s conference on the Dual Eligible Opportunity for Health Plans.  We are expecting a sold-out crowd so click here to register early.

The Dual Eligible Opportunity for Managed Care
The dual eligible market, with nearly 9 million members, represents a $300 billion opportunity for health plans.  The stakes are huge, but so are the challenges – even for Medicaid and Medicare plans accustomed to the ins and outs of government-sponsored programs.  During this keynote address, you’ll get a clear assessment of the size and profit potential of duals for managed care – as well as an understanding of type of skill-sets and investments required to succeed.

Kevin Hayden
President of State-Sponsored Business

Assessing the Dual Eligible Pipeline: Which Health Plans Are Best Positioned to Win Question: Which health plans are the most likely to benefit from the dual eligible market – Medicare or Medicaid plans?  Answer: Both.  However, Medicaid is probably best positioned to take the bigger share.  On this panel, you’ll get a competitive assessment of which health plans are most likely to win big in the dual eligible market and why. 

Tom Kelly
President & CEO
Schaller Anderson an Aetna Company

Legal and Regulatory Challenges in the Dual Eligible Market: A State-by-State Assessment
Competing in the managed dual eligible market means keep tabs on a wide variety of legal and regulatory issues on both the state and federal level.  On this panel, you’ll get a breakdown of trends, developments and key areas of concern on the legal and regulatory frontinformation essential to planning any dual eligible strategy.

Thomas Johnson
President and CEO
Medicaid Health Plans of America

Medicare Advantage Is Doing Just Fine

February 2, 2012

For those of you who thought payment cuts would kill Medicare Advantage, think again.  HHS reports Medicare Advantage membership have risen 10% and premiums have fallen 7% since this time last year.  Average premiums are $31.54 in 2012, while enrollment stands at 12.8 million. “Since 2010, when the Affordable Care Act was passed, Medicare Advantage premiums have fallen by 16 percent and enrollment has climbed by 17 percent,” HHS notes.

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