UnitedHealth, Humana Look To Increase Enrollment In Medicare Advantage Plans

Main Category: Medicare / Medicaid / SCHIP
Article Date: 06 Dec 2007 - 10:00 PDT

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UnitedHealth Group, the largest U.S. health insurer, and Humana, the fourth-largest health insurer, have "bet heavily on the federal Medicare program" as "sales slump in the private-sector parts of their business," the New York Times reports. According to the Times, the "biggest gamble" on the "Medicare limb" is Medicare Advantage, in which health insurers manage physician networks. One in five of the 43 million Medicare beneficiaries is enrolled in a private MA plan, but the program has "become a political target" because reimbursements for the plans are 12% higher than payments under the fee-for-service program for equivalent benefits, the Times reports. Reimbursements for MA plans will reach an estimated $100 billion by 2009 without changes to the program.

The Bush administration has said that MA plans improve choice and benefits for Medicare beneficiaries, but some lawmakers maintain that the program benefits health insurers and have sought to reduce reimbursements for the plans. Many large health insurers are "reluctant to seek growth" in the Medicare business, which is "subject to changes in federal payments and procedures," but UnitedHealth and Humana "seem undeterred," according to the Times.

UnitedHealth, which has 1.3 million members enrolled in MA plans, hopes to increase enrollment through a plan marketed with AARP, and Humana, which has 1.1 million members enrolled in MA plans, hopes to increase enrollment by at least 200,000 this year. Medicare business this year will account for about 15% of pretax earnings for UnitedHealth and for about 75% of pretax earnings for Humana. In contrast, Medicare business this year will account for no more than 5% of earnings for WellPoint, Aetna and Cigna (Freudenheim, New York Times, 12/5).

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