Health Insurance Quotes
HMO consolidation accelerates in New England
Acquisitions, divestitures, and liquidations rocked New England's managed care industry and increased HMO consolidation in 1999, according to a June 2000 report, The New England HMO Performance Analysis, published by Mark Farrah Associates, a market research firm based in Kennebunk, Me.
The report shows that the number of HMOs doing business in the region dropped from 54 in 1998 to 48 as of December 1999. The study concludes that this downward trend is likely to continue.
|"Consolidation gave HMOs the justification to argue for more money."|
Consolidation rose last year as several HMOs left the playing field, including Harvard Pilgrim Health Care in Rhode Island and Tufts Health Plan, which had customers in Maine, Rhode Island, and New Hampshire. In Vermont alone, 90,000 consumers had to find new health insurance when Kaiser Permanente announced it would shed its money-losing Northeast operations.
Across the region, several plans have stepped in to fill the void, most notably those who also acquired other HMOs last year. They include Anthem Health Plans, which acquired Blue Cross Blue Shield of Connecticut, and Aetna U.S. Healthcare, which bought Prudential Healthcare and NYLCare.
Despite the initial jolt caused by all this activity, most consumers only experienced minor "administrative changes," according to LuAnne Farrah, author of the analysis. She adds that while consumers did not see any particular drop in performance in the delivery of their health care, they did experience significant premium increases. "Consolidation gave HMOs the justification to argue for more money," Farrah says. "They could point to plans that went under like Tufts and say they couldn't sustain their level of care without increases."
Patient rights groups, however, warn that HMO consolidation has led to the reduction of the number of the largest for-profit managed care companies from 18 to just six gigantic health conglomerates: Aetna, CIGNA, Foundation Health Systems, Pacificare, and Wellpoint Health. (Kaiser is also a major player, but it is the only nonprofit in the group.)
The fear is that these entities will limit competition, enabling them to dictate tough contract terms to their member physicians and set — and get — higher premiums from their customers for their plans.
Other HMO statistics included in the report:
- While New England HMOs enrolled 6.1 million members as of December 1999, that figure represents a two percent decline from 1998
- Market penetration was highest in Connecticut, where 56 percent of those insured were HMO members, and lowest in Vermont, where only 22 percent were enrolled in an HMO
- Despite rising costs, HMO plans owned 48 percent of all health insurance business in New England and collectively earned $12.7 billion in premium revenue.