- Scan Group and CareOregon have signed a deal to merge, creating a nonprofit healthcare organization that will provide insurance coverage to nearly 800,000 members in five states.
- The combined company will primarily focus on government-sponsored health plans, covering those through its existing Medicare Advantage and Medicaid plans.
- The combined company will be named HealthRight Group. The deal is expected to close next year and is subject to regulatory approvals. Current Scan CEO Sachin Jain will serve as the CEO of HealthRight Group.
In coming together the two will benefit from greater scale, executives said in a statement announcing the deal on Wednesday.
Scan Health Plan covers 270,000 Medicare Advantage members in Arizona, California and Nevada and is expanding into Texas next year.
CareOregon covers 500,000 Oregonians through Medicaid and Medicare Advantage plans as well as its dental and in-home care organizations.
HealthRight signaled that it plans to use its scale to take on competitors in the managed care space.
“For far too long, America’s not-for-profit managed care organizations have operated at a scale disadvantage to their larger for-profit competitors,” Jain said in a statement.
Government-sponsored insurance is a competitive corner of the health sector.
Centene is the biggest player in the managed care space that caters to people eligible for government-sponsored plans like Medicaid.
The St. Louis-based insurer is the largest health plan serving the most low-income members through Medicaid and the marketplace. Centene covers more than 15 million Medicaid members and 2 million members through the Affordable Care Act marketplace.
Centene generated revenue of nearly $126 billion in 2021.
Molina, based in California alongside Scan, is another large player in the government-sponsored space. It covers more than 5 million members in Medicaid, Medicare and the marketplace and generated revenue of nearly $28 billion last year.
Enrollment in Medicaid has soared throughout the pandemic as federal regulators eased enrollment restrictions in a bit to protect consumers from losing health insurance coverage during the COVID-19 crisis.
Medicare Advantage continues to grow in popularity, with nearly half of the Medicare-eligible population enrolled in an MA plan. Plan profitability has also grown over the pandemic as healthcare use declined and, alongside it, medical expenditures for plans, according to a report from the Medicare Payment Advisory Commission.