Dive Brief:
- The state of Delaware, which provides Medicaid coverage to 230,000 residents through Aetna and UnitedHealthcare, plans to end its ties with Aetna by the end of the year. The insurer and state couldn't agree on rates for the program. Instead, Delaware has penned a three-year contract with Highmark to begin the first of the year; it also renewed a three-year agreement with UnitedHealthcare.
- The state pays the insurers fixed monthly payments for the plans. The two had been talking for several months but could not reach an agreement on reimbursements. In 2013, the insurer collected more than $3.8 billion in premiums from states, 14% of which did not go toward medical care. Changes to the Medicaid contract could have been part of the problem for the insurer.
- Highmark is a subsidiary of a Pittsburgh-based Blue Cross Blue Shield and operates Delaware's Blue Cross plan. Aetna and the state will work together to move the 137,000 current patients to the other two plans. Information will be sent to beneficiaries over the next few weeks regarding the change.
Dive Insight:
Aetna may have dropped its contract, but UnitedHealth Group, one of the largest Medicaid insurers in the nation kept its contract. This is likely because of the padding it provides to the company's bottom line. The company announced last week that its Q3 profits were more than $1.6 billion. The largest area of growth was in Medicare Advantage and Medicaid, which was up 34% from the same time in 2013.
Medicaid expansion under the Affordable Care Act has presented a huge opportunity for market penetration. Experts predicted before expansion that $46.3 billion in state Medicaid spending would go toward managed care plans in states that opted for expansion through 2018. If all states expanded, $40 billion to $45 billion in new revenue could go toward insurers by 2016.