UnitedHealth Group Launches Product To Protect Members' Future Insurability

Main Category: Health Insurance / Medical Insurance
Article Date: 04 Dec 2008 - 3:00 PDT

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UnitedHealth Group on Tuesday announced a new, "first of its kind" product that allows members to pay a monthly fee to secure future health coverage, even if they become ill, the New York Times reports. The product, called UnitedHealth Continuity, is intended for people who currently have insurance but are concerned they might lose coverage -- because they lost their job or retire early -- and might not be able to obtain other coverage.

Enrollees in Continuity will pay 20% of the current premium on an individual policy monthly to reserve insurance under that policy for the future, according to the Times. Monthly fees will depend on the age, gender, location and selected coverage plan of each enrollee. According to the Times, most people who currently are ill will not be eligible for the product. Members must pass a medical review in order to gain access to the product.

Continuity initially is available in 25 of the 40 states where UnitedHealth sells individual insurance. The insurer currently is applying to sell the product in the 15 other states.

"What this product is designed to do, for a very modest premium, is to essentially protect your insurability for the future," Richard Collins, president of UnitedHealth's individual insurance unit, said. Collins added that he is the first policyholder under the plan and that his monthly fee is $50.

Reaction
While some health policy experts acknowledge that people who become ill have a difficult time finding affordable health insurance, they question the new product in light of possible changes to the health care system under President-elect Barack Obama's administration. "As an individual, you're betting against health reform," Peter Lee, executive director of national health policy for the Pacific Business Group on Health, said. According to Lee, there is discussion among lawmakers regarding mandating that private insurers offer individual coverage to anyone, regardless of their health status. Such a requirement would make Continuity obsolete, the Times reports. Collins said he is not concerned about health care reform making the product obsolete because of the various uncertainties that surround any government efforts.

Bob Vineyard, an insurance broker, said that Continuity will make sense for someone who anticipates gaps in the coverage provided by employers but that he does not expect the product to have wide appeal. Considering the current economic downturn, many people might not want to spend money for future coverage, he said. "I think it's got very, very limited application," he added. In addition, some health care reform advocates said that the government should do more to ensure everyone has access to coverage instead of expecting individuals to "spend hundreds of dollars a year for a guarantee they may not need," the Times reports.

Some experts said that many people buying the product eventually could develop costly medical ailments that eventually would force enrollees to pay higher premiums. UnitedHealth said the monthly fees could deter higher medical expenses that might occur if people on the plan eventually get sicker (Abelson, New York Times, 12/3).

Expected Member Drop
In related news, UnitedHealth on Tuesday announced that it predicts enrollment in commercial health plans next year will decline by as many as 1.5 million members, including a reduction of between 450,000 and 800,000 enrollees in the company's most lucrative plans (Krauskopf, Reuters, 12/2). UnitedHealth expects about 31.9 million to 32.5 million members in its commercial and government-sponsored plans in 2009, according to CFO Mike Mikan (Wisenberg Brin [1], Dow Jones/Wall Street Journal, 12/2).

Enrollment in the company's Medicare Advantage plan is expected to increase by between 100,000 and 135,000 beneficiaries next year (Reuters, 12/2). The company predicts a net income of $3.4 billion to $3.7 billion in 2009, compared with an estimated 2008 profit of $3.7 billion (Wisenberg Brin [1], Dow Jones/Wall Street Journal, 12/2). CEO Stephen Hemsley said that UnitedHealth would focus on controlling operating costs next year (Reuters, 12/2). Hemsley added that he hopes to increase the company's dividend but that now "does not seem the right time for us to be engaging in a broader dividend" (Winsenberg Brin [2], Dow Jones/Wall Street Journal, 12/2).

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