Private Health Insurers Look to Run State Medicaid Plans

Posted in Health Insurance , Medicaid

December 29th, 2010

As Medicaid looks to take on millions more patients by 2014, states are reaching out to private health insurance companies to run their programs–and insurers are lining up quickly to place their bids. With many health insurance companies due to take a possible hit in profits as a result health care reform, getting their hands on Medicaid is likely to be the only bright spot from the new law.

Insurance Companies Snatch Up Medicaid Plans

Medicaid is expected to see a 32-percent increase in enrollment (roughly 16 million new recipients) under the new health care reform law because eligibility will be widened to 133 percent of the federal poverty level (or about $15,000 a year under the health law). It’s for this reason that over the next three years, states will be offering up bids or expansions for this health insurance program.

This is great news for insurers, as they will be able to take part in an additional $38 billion in Medicaid revenue, according to research from Citigroup. So far, big insurers like UnitedHealth Group, along with more specialized plans like Molina Healthcare Inc. Texas and Georgia, are expected to solicit new contracts for their private Medicaid plans early next year.

By states getting health insurance companies lined up for contracts now, the program will be able to avoid disruption in 2014. The plans that win bids next year are expected to be up and running when the big expansion takes place. Contracts will be able to run for about five years.

Changes for Recipients

If you are a current recipient or will be among recipients under the new law, you may notice that plans taking on the new programs will be making a stronger effort to address the following:

• The needs of long-term-care enrollees
• Issues that arise for disabled enrollees
• Better care management that could save states money and expand program options

For example, WellPoint in California launched a program this year that packages medicines for customers in packets marked for breakfast, lunch and dinner to help increase compliance among difficult-to-manage patients. Molina has also decided to run clinics so it has greater insight into what patients need.

It’s important to note that some states are still unsure whether they want to continue offering Medicaid altogether due to the pressures of their state budgets, but the Medicaid expansion process is still a new concept, which means we’re likely to receive a wealth of information on important program changes throughout 2011.