While health insurers intend to participate in public health insurance exchanges, the general strategy is to wait and see. Payers are looking to private exchanges and even proprietary exchanges to enable them to more efficiently serve their customers.
During their second-quarter earnings calls in July and August, senior executives at the major health plans expressed cautious optimism as they prepared for health insurance exchanges, the centerpiece of healthcare reform.
While they plan to participate in the public HIX, the overall strategy is to wait and see. Insurers are looking to private exchanges and even proprietary exchanges in the case of Aetna and Cigna, to enable them to more effectively and efficiently serve their customers.
Medicare Advantage and Medicaid remain promising and yet challenging investments in the face of state and federal funding and budget woes. To maintain revenue streams in these markets, insurers are looking to more collaborative care among their providers and providing more in-home services to prevent costly hospital stays.
Here are some of the highlights:
Aetna
Aetna is in the process of developing its own proprietary health insurance exchange, which is expected to focus on population management and will include the ability for consumers to select products and services based on their individual needs.
The insurer is taking what CEO Mark T. Bertolini describes as a "cautious approach" to public health insurance exchanges, but expects to be part of up to 14 or 15 public HIX. In recent weeks Aetna has announced that it will not participate in the California, Connecticut, Georgia, or Maryland exchanges.
In addition, Aetna expects to participate in up to 15 private exchanges in 2014. The private exchanges will offer Aetna more freedom than the public exchanges in defining how it participates and the products it offers.
Aetna's acquisition of Coventry Health Care, which was completed during the second quarter, is part of its strategy to enhance its opportunities in the Medicare Advantage and Medicaid markets. While both markets are expected to grow, pricing pressures in Medicare Advantage will slow that growth compared to recent years.
Cigna
Cigna expects to have about $1 billion in free cash flow to spend on strategic investments, including technology and merger and acquisition opportunities. CEO David Cordani says the insurer is looking at M&As to "further expansion of our senior footprint" as well as in the Medicare/Medicaid dual-eligibles marketplace. It is also looking at opportunities in its individual or retail-based portfolio of capabilities.
The insurer expects to participate in a variety of public and private health insurance exchanges. Private exchanges offer an opportunity to focus products on the retail purchasing experience for individual employees or customers, as well as to encourage the adoption of engagement, incentive-based programs. It plans to roll out in 2014 a proprietary exchange.
Cigna's collaborative accountable care program, an insurer/physician partnership that includes clinical support and data to enable physicians to add value to the care they provide, now has more than one million members. The insurer reports that it is seeing improvements in medical costs and care quality, which exceed the market averages.
Humana
Humana plans to participate in the health insurance exchanges in 14 states where it already sells insurance and has provider networks and clinical infrastructure in place. HIX participation is part of Humana's long-term goal to provider coverage to people for their lifetime. "This is a nice opportunity to create a relationship with somebody who is under age 65 and have them age into our Medicare programs," said James E. Murray, Humana's CFO and executive vice president.
The insurer is in the process of acquiring American Eldercare, which will enable Humana to provide long-term care management for Medicaid recipients. Bruce Broussard, Humana's CEO, noted that the acquisition will enable Humana to bring in-house services for that market that it has been outsourcing.
UnitedHealthcare
While UHC officials remain committed to Medicare Advantage, concerns about significant underfunding have lead the giant insurer to exit some of its MA markets, reduce its plan offerings, and reduce benefits. Officials expect these steps to mean MA membership growth will be slower in 2014 than it has been in recent years.
In addition, UHC is reshaping its local MA provider networks to emphasize collaboration and consistency of care, especially for members with chronic conditions. It also will increase its use of in-home health reviews and services.
UHC officials describe its health exchange participation as "modest" with an expectation that it will have a presence in 12 HIX. While describing the opportunities as "huge over the long term," Officials describe HIX participation at this point as more of a learning opportunity.
WellPoint
Joseph Swedish, the WellPoint CEO, has been on the job less than nine months, and is just beginning to make his mark on the company. He has realigned the company organization around two operating divisions—commercial and specialty business, and government business—in an effort to promote efficiency and accountability.
A review of IT expenditures—more than $1 billion annually—is underway. The goal is to free up capital to invest in data analytics and information management to improve market position and performance, especially6 in terms of medical management, customer service, and predictive modeling.
WellPoint is preparing for Medicaid expansion related to healthcare reform. It expects about 50% of its Medicaid states to participate in expansion effective Jan. 1.
Margaret Dick Tocknell is a reporter/editor with HealthLeaders Media.
