Driving interest is the aging baby boomer population and a move by businesses to shift their 65 year-old and older retirees off of employee -sponsored plans and onto Medicare Advantage plans. Since 2005, the number of beneficiaries enrolled in Medicare Advantage managed care plans has more than doubled from 5.3 million to 11.1 million in 2010, according to the Kaiser Family Foundation.
Health insurers are looking to jumpstart their participation in the Medicare Advantage market (CIGNA's acquisition of HealthSpring), to expand their geographic footprint (Humana's acquisition of Arcadian Management Services), and to gain expertise in treating chronic conditions ((WellPoint's acquisition of CareMore Health Group).
8. Blue Shield of California Caps Income
In June Blue Shield officials announced that the health insurer would voluntarily limit its income to 2% of revenue and rebate around $180 million to its members and others. CEO Bob Bodaken called the cap a "paradigm shift for a health plan" and asked other health plans to take a similar step to help "solve the seemingly intractable problem of rising healthcare costs." The move was greeted with a healthy dose of skepticism by just about everyone. Some suggested that if Bodaken was really concerned about healthcare costs he should consider reducing his own $4.6 million salary.
Others interpreted the cap announcement as an admission by the insurer that it was making excessive profits. Consumer groups pointed to the Blues plan's $3.6 billion in reserves, which is considerably in excess of what is required to meet state financial solvency requirements, and asked why Blue Shield wasn't giving more money back to its policyholders.
Cynicism aside, Blue Shield members were notified in November that credits ranging from 18% to 54% percent of one month's premium would appear on their December bills.
9.Humana Taps a New Leader
CEOs come and go at most companies but Humana likes to keep its leaders around for a while. In November the company announced Bruce D. Broussard as its incoming president and future chief executive. Broussard will be the company's fourth CEO in its 50-year history.
Michael B. McAlister, the current president, CEO and board chair is expected to retire by mid-2014. He assumed the leadership position of the struggling company in 2000 and is generally credited with focusing its efforts on more lucrative books of business, including Medicare Advantage.
Broussard joins Humana from the drug wholesaler McKesson where he was CEO of McKesson Specialty Health. Before joining McKesson he was CEO of US Oncology where he worked closely with the Centers for Medicare & Medicaid Services. That's an important connection given Humana's emphasis on Medicare business.
Broussard has worked in a variety of healthcare sectors including oncology, pharmaceuticals, assisted living/senior housing, home care, physician practice management, surgical centers and dental networks. That makes him a great fit to implement Humana's long-term strategy. During Humana's third-quarter 2011 earnings call in October McAllister touted the revenue prospects for home care, pharmacy and integrated wellness.
10. Three Blues Plans Acquire Majority Ownership of Bloom Health
WellPoint, Health Care Service Corp. and Blue Cross Blue Shield of Michigan acquired Minneapolis-based Bloom Health, a private health insurance exchange that offers defined contribution plans to employers.
The move could mean the insurers are settling in to create a nationwide exchange that will compete for employer clients with the state-run health insurance exchanges being developed as part of healthcare reform. The Blues plans already have a health plan presence in 19 states.