WellPoint Not Likely to Buy Provider Organizations

April 25, 2013

In his first conference call with Wall Street analysts, WellPoint chief executive Joseph Swedish stated, “I do not currently see vertical integration as a likely path for WellPoint.  The models are so divergent that it just does not seem to be a best use of capital.”

The comments dispel speculation that Swedish—a long-time hospital executive and surprise choice to lead WellPoint—might have been chosen to pursue the acquisition of various types of provider organizations.

Swedish added, however, that WellPoint “will certainly engage with leading providers that are similarly addressing cost efficiency challenges and are willing to align with our products and networks.”  He said, “I spent my career on the provider side of the health care industry, with substantial experience dealing with payment models, reform changes, reimbursement changes and operational improvements.”

Swedish said he expects his efforts at WellPoint to continue to be “characterized by an intense operational focus and a drive for expense efficiency, leveraging technology investments.”

Correction, 4-26-13: We had Swedish’s name wrong in a prior version.


WellPoint Eyes Low to Mid-Single Digit Exchange Margins

April 24, 2013

Comments by WellPoint chief executive Joseph Swedish on the company’s first-quarter 2013 earnings call today:

Operating margins on the exchanges would definitely vary by state. But we currently believe that they will be in the low to mid single-digit range across our markets over time….We have substantially completed the exchange base product design and pricing development work. We’ve signed contracts with the majority of our providers across our markets. We feel very good about that. We continue to believe our brand name strength and unit cost advantages position us well to achieve meaningful growth related to the exchanges over time….We continue to focus on competing the exchanges in all of our Blue markets, but obviously can’t fully commit until we know the rates and regulations as they evolve.

Overall, it was a good day for WellPoint.  Shares rose nearly 6% after the company beat Wall Street earnings expectations, reporting a 3% increase in net income for the first quarter of 2013.  The company also raised its full-year 2013 earnings growth expectations.

Correction, 4-26-13: We had Swedish’s name wrong in a prior version.

Baucus to Retire

April 23, 2013

Senate Finance Committee Chairman Max Baucus (D-MT) announced he will retire in 2014 after 36 years in the Senate.  He was a key figure in the drafting and passage of ObamaCare, but is blamed by liberals for dismissing single payer healthcare as an option during the ObamaCare debate.  Baucus, who has been a big beneficiary of health insurance industry campaign funds, admitted that ruling out single payer was a negotiating mistake, according to a 2009 article in The New York Times:

He conceded that it was a mistake to rule out a fully government-run health system, or a “single-payer plan,” not because he supports it but because doing so alienated a large, vocal constituency and left Mr. Obama’s proposal of a public health plan to compete with private insurers as the most liberal position.

Video of the Day: NYC Deputy Mayor on Emblem

April 23, 2013

In this video, New York City deputy mayor Cas Holloway of the lame duck Bloomberg Administration cites “consistent, substantial increases” in premiums and inefficient management as reasons why the city wants to go out to bid for a new health plan.  The $6 billion NYC account has been handled by Emblem’s HIP and GHI for decades.  Holloway says:

HIP and GHI have internal management issues that appear to be driving up the cost of care…There’s not an incentive to manage as efficiently as possible.”

The city also wants workers to contribute to premiums–especially for employees who don’t agree to join wellness programs.  Unions representing city workers are against the proposal.

A loss of the city account, with 1 million lives, would be a huge blow to Emblem.  But realistically, it’s hard to imagine anything happening with this account until after the November elections.  Mayor Bloomberg can’t run again because of term limits.

Quote of the Day: Ezra Klein

April 22, 2013

Regarding concerns over the implementation of ObamaCare by Senate Finance Committee Chairman Max Baucus (D-MT):

Republicans manage to deny Obamacare the anticipated funding required for smooth implementation. This makes implementation go less smoothly. Democrats begin to worry. Republicans use Democratic worries over implementation as a way to attack the law itself.

Yet another reason I would never survive in politics.

UnitedHealth Says Exchange Contracting Going Well

April 19, 2013

Comments from Gail Boudreaux, EVP of UnitedHealth Group, on the company’s  first-quarter 2013 earnings conference call.

Our position on exchanges hasn’t changed….As we think about the contracting side, again, I think I shared this last time that we see the contracting based on a market-by-market assessment and the economics needed to participate effectively in that market and an exchange.  So those rates are going to vary from commercial to something less. We’ve had a  pretty long history of having value-based networks and have been successful at  that. And I would tell you, at this stage, our contracting for the exchange markets is going very well, so we feel positive about that.

Exchanges and High Risk Pools

April 19, 2013

Question of the Day: Do you think health plans that administer high risk pools will be more vulnerable to adverse selection in insurance exchanges?  Said another way, will sick members already familiar with the plan that administers their coverage want to stay with that carrier in an exchange? Here’s a list of plans that administered high risk pools by state.

Plans Providing High-Risk Pool Coverage by State

Alabama: BCBS-AL and UnitedHealth
Alaska: First Choice Health PPO
Arkansas: BCBS-AR
California: Kaiser (until 9/1/10) and WellPoint (until 9/1/10)
Colorado: Rocky Mountain Health Plans
Connecticut: UnitedHealth
Florida: NA
Idaho: SelectHealth
Illinois: HCSC
Indiana: NA
Iowa: Health Insurance Plan of Iowa
Kansas: Coventry
Kentucky: NA
Louisiana: Louisiana Health Plan
Maryland: CareFirst
Minnesota: Medica
Mississippi: UnitedHealth
Missouri: WellPoint and BCBS-Kansas  City
Montana: BCBS-MT
Nebraska: Coventry
New Hampshire: New Hampshire Health Plan
New Mexico: HCSC
North Carolina: Inclusive Health
North Dakota: BCBS-ND
Oklahoma: HCSC
Oregon: Cambia
South Carolina: BCBS-SC
South Dakota: NA
Tennessee: BCBS-TN
Texas: HCSC
Utah: SelectHealth
Washington: First Choice Health PPO
West Virginia: Wisconsin
Wyoming: BCBS of WY

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