UnitedHealth Group, the biggest health insurer in the U.S., has announced that by the end of the month it will be leaving American Health Insurance Plans (AHIP), the industry's largest trade group. "UnitedHealth Group believes the interest of our company and the customers we serve are no longer best represented by AHIP and accordingly are ending our membership effective June 30," Matt Stearns, a spokesman for United, said in a statement. "AHIP has set forth a strategy and direction it feels best serves a membership profile and need that does not fit UnitedHealth Group and our diversified portfolio."
In a Modern Healthcare blog post, health insurance industry news writer Bob Herman said that United's decision to abandon AHIP sends a powerful message about the health insurance industry. "It's roughly equivalent to Kaiser Permanente leaving the American Hospital Association or Pfizer leaving the Pharmaceutical Research and Manufacturers of America," he said.
Just last month, Karen Ignagni, AHIP's CEO and one of the most influential lobbyists in the U.S., left the company after 22 years. Although United never said her departure was a factor in its decision to leave AHIP, Stearns told The Wall Street Journal that AHIP's need to respond to the interests of nearly 1,300 members "understandably results in a more limited and complicated focus on advocacy."
AHIP countered by saying that the company remains committed to its legislative agenda, which among other things, includes continuing support of the Affordable Care Act and keeping medications affordable for consumers. "AHIP has a strong and demonstrated track record of successful advocacy on behalf of the health insurance industry," AHIP interim CEO, Dan Durham, said in a statement. "Our board has focused us on the critical issues facing health insurers and the customers we serve, including affordability, high cost drugs and Medicare Advantage."
It's also possible that United just doesn't need AHIP anymore. "UnitedHealth has become a much more multifaceted insurer over the past several years," says William Bithoney, Chief Physician Executive and Managing Director in BDO's Healthcare Advisory Practice. "It has established a major technology and software business called Optum, [which] serves hospitals, develops ACOs, creates population health strategies and does research. UnitedHealth's recent multi-billion dollar purchase of pharmacy benefit plan, Catamaran, also makes it a powerful force in determining pharmaceutical prices and cements its ability to control healthcare formularies across many markets. That means UnitedHealth is also large enough to no longer need an industry advocacy group."
Bithoney says that United Health is the "800 pound gorilla" and that its size is not necessarily a negative. "UnitedHealth can now be a force to drive down healthcare costs across the huge board that is the healthcare marketplace," he says. "It can leverage its market presence to force more evidence-based medical care in the U.S., which is sorely needed. However, UnitedHealth's rise and the consolidation of the largest insurer into what may ultimately be a 'big three' constitutes a major threat to hospitals and providers."