Deals Speed Health Insurer Consolidation

Neither the Anthem-WellPoint deal nor the UnitedHealth-MAMSI deal is a sure thing. Regulators in Kansas and Connecticut have blocked efforts by Anthem to acquire Blues plans in their states in recent years, and Maryland regulators recently stopped an attempt by WellPoint to acquire CareFirst Inc., Owings Mills, Md.

UnitedHealth broke off an agreement to acquire Humana Inc., Louisville, Ky., in 1998.

The American Medical Association, Chicago, already is urging federal regulators to scrutinize the Anthem-WellPoint and UnitedHealth-MAMSI deals.

The deal announcements suggest the United States “is headed toward a health care system dominated by a few publicly traded companies that operate primarily in the interest of shareholders,” says AMA Chairman Donald Palmisano.

Some health insurance producers also worry about consolidation.

“When the marketplace contracts, there are fewer choices for employers, and there are fewer chances to be creative,” says Keith Bell, president of Benefit Plans Unlimited Inc., Bloomfield, Conn., who watched Anthem acquire Blue Cross and Blue Shield of Connecticut in 1997.

Anthem has improved the old Connecticut Blues service and maintained a similar pricing strategy, but it also has started requiring producers to sell substantial amounts of dental insurance and other ancillary benefits to stay in its market leaders program, Bell says.

In Nevada, where Anthem acquired Blue Cross and Blue Shield of Nevada in 1999, “one of the things they did was to terminate a lot of the brokers,” says Robert Bishop, president of KIA Insurance, Las Vegas, and a past president of the Nevada State Association of Health Underwriters. “The attitude was, If you dont put all of your business or a majority of your business with us, we dont want you.”

Bishop, who still sells Anthem coverage, says Anthem has improved customer service and may be competing somewhat harder than the old Nevada Blue did for individual insurance business. “Theyve done a good job of trying to answer brokers needs,” Bishop says.

But Anthem now sells through telemarketers in Nevada, and Bishop says he believes Anthem would like to stop selling through brokers.

California brokers are hoping WellPoints pro-producer attitude will prevail after the merger. WellPoint “is as friendly to the broker community as anybody,” says Jeffrey Miles, a Marina del Rey, Calif., broker who is president of the California Association of Health Underwriters.

Reproduced from National Underwriter Life & Health/Financial Services Edition, October 31, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.