Big in­surer de­fec­tions sig­nal AHIP’s fad­ing clout

Modern Healthcare - - NEWS INSURERS - By Bob Her­man

Man­ag­ing mem­bers of a trade group is of­ten like herd­ing cats. Worse, ac­tu­ally. All kinds of cats—tab­bies to lions. And the strain of cor­ralling con­sen­sus is start­ing to frac­ture Amer­ica’s Health In­sur­ance Plans, as the in­dus­try’s for-profit gi­ants grow even big­ger and their pri­or­i­ties di­verge from the in­ter­ests of their smaller and not-for-profit peers.

Aetna’s de­par­ture from AHIP months af­ter Unit­edHealth Group bolted is fur­ther ev­i­dence that the large na­tional in­sur­ers are in­creas­ingly happy to fight their own bat­tles on Capi­tol Hill, such as shep­herd­ing their pend­ing mega-merg­ers and ne­go­ti­at­ing changes to the ACA mar­ket­places.

Some in the in­dus­try are mur­mur­ing that Mar­i­lyn Taven­ner, the CMS’ for­mer ad­min­is­tra­tor, is the wrong per­son to lead AHIP dur­ing this growth phase of the Af­ford­able Care Act.

Taven­ner took over AHIP’s helm last year from Karen Ig­nagni, the group’s long­time chief who com­manded Wash­ing­ton’s at­ten­tion but left to lead New York City-based health in­surer Em­blemHealth.

Ob­servers have hailed Taven­ner for her abil­ity to win sup­port from both sides of the political aisle, but some in­dus­try sources be­lieve she has fo­cused too much on co­op­er­at­ing with the Obama ad­min­is­tra­tion rather than ad­vo­cat­ing for their spe­cific busi­ness is­sues.

“Taven­ner was never the pick of the ma­jor car­ri­ers, and she is per­ceived as too much of a shill for the White House, de­spite main­tain­ing an im­age of ob­jec­tiv­ity,” an

un­named AHIP board mem­ber told In­ter­Pro, an in­sider in­sur­ance news­let­ter.

The AHIP board unan­i­mously elected her CEO in July. The as­so­ci­a­tion said Taven­ner was not avail­able for an in­ter­view.

Los­ing mem­bers as large as Aetna and Unit­edHealth cer­tainly chips away at AHIP’s political in­flu­ence. Unit­edHealth is the na­tion’s big­gest in­surer by rev­enue—ex­pected to to­tal more than $140 bil­lion for 2015—and now has 46.1 mil­lion cov­ered lives.

Aetna will have 33 mil­lion med­i­cal mem­bers if it nabs ap­proval for its Hu­mana trans­ac­tion. Both com­pa­nies have can­ni­bal­ized AHIP’s mem­ber­ship over the past sev­eral years by ac­quir­ing com­peti­tors and now may be out­grow­ing the group.

“Th­ese big com­pa­nies now have such a sig­nif­i­cant pri­vate lob­by­ing clout, they think hav­ing to deal with the ag­gra­va­tion of as­so­ci­a­tion pol­i­tics just isn’t worth it,” said Bob Laszewski, a health pol­icy con­sul­tant.

In­deed, Aetna, An­them, Cigna Corp., Hu­mana and Unit­edHealth all spend mil­lions of dol­lars on lob­by­ing each year out­side of AHIP, and they pre­vi­ously had their own loose coali­tion. And Aetna, Hu­mana and Unit­edHealth are the found­ing mem­bers of Wash­ing­ton’s new­est health in­sur­ance lob­by­ing group, the Bet­ter Medi­care Al­liance, which fo­cuses on Medi­care Ad­van­tage. The big five also have built up their own govern­ment re­la­tions of­fices in Wash­ing­ton.

“You look at it now, they’re huge,” said an in­dus­try source who asked not to be iden­ti­fied. “I bet if you to­taled up the num­ber of peo­ple in those of­fices, it would al­most com­pare in size to the AHIP ad­vo­cacy staff.”

This isn’t the first time the in­sur­ance in­dus­try has had prob­lems unit­ing be­hind one ma­jor lob­by­ing voice. Be­fore AHIP was formed in 2003, in­sur­ers were split into two camps: the Health In­sur­ance As­so­ci­a­tion of Amer­ica, the main group, and the Amer­i­can As­so­ci­a­tion of Health Plans, which catered to the HMO in­dus­try. Those two or­ga­ni­za­tions ul­ti­mately merged.

But the large car­ri­ers, which have bal­looned in size over the past decade through merg­ers and ac­qui­si­tions, may feel as if their voices do not carry enough weight within AHIP any­more. Aetna hired five out­side lob­by­ing firms to push the fed­eral govern­ment to ap­prove its deal. An­them and Cigna also tapped hired guns to help with their pend­ing merger.

The big five’s other most press­ing pri­or­i­ties in­clude bol­ster­ing the in­creas­ingly prof­itable Medi­care Ad­van­tage pro­gram by keep­ing pay­ment rates sta­ble, and chang­ing the ACA’s in­di­vid­ual mar­ket. The ex­changes have been of par­tic­u­lar con­cern. Each big-five in­surer is ei­ther los­ing money on the plans or is per­form­ing below ex­pec­ta­tions. They’ve asked the Obama ad­min­is­tra­tion to scrap ef­forts to stan­dard­ize plan op­tions and im­pose min­i­mum re­quire­ments for provider net­works.

AHIP has fought for those is­sues. But it also has to worry about Medi­gap poli­cies and other smaller, an­cil­lary prod­ucts like vi­sion in­sur­ance, which barely reg­is­ter on the gi­ants’ radar but are the lifeblood of some of AHIP’s spe­cial­ized mem­bers.

“Maybe the big­ger ques­tion is, why did AHIP hold it­self to­gether this long?” Laszewski said.

Aside from am­plify­ing their own lob­by­ing mus­cle, big in­sur­ers may see a fi­nan­cial ben­e­fit in ditch­ing AHIP. Mem­ber­ship dues for the largest com­pa­nies are es­ti­mated to cost at least $1 mil­lion, and per­haps more, ac­cord­ing to in­dus­try sources. AHIP and in­di­vid­ual in­sur­ers did not dis­close fig­ures.

AHIP spokes­woman Clare Krus­ing said the as­so­ci­a­tion holds con­fer­ences and events to build rev­enue and keep fees sta­ble, and its board is con­sid­er­ing other un­spec­i­fied changes “to in­crease ad­vo­cacy.” The next ma­jor AHIP board meet­ing is in March.

Aetna’s de­par­ture “is cer­tainly sig­nif­i­cant for AHIP and a fur­ther sign of the post-ACA mar­ket dy­nam­ics,” said Kip Piper, a D.C.based con­sul­tant and for­mer CMS ad­viser. “Drop­ping the AHIP dues cuts a ma­jor ad­min­is­tra­tive ex­pense at a time when in­sur­ers are un­der greater mar­gin pres­sure and in­creased vis­i­bil­ity on Wall Street.”

Unum, a dis­abil­ity and sup­ple­men­tal in­sur­ance com­pany, has also left AHIP. When asked if the as­so­ci­a­tion was wor­ried more mem­bers might jump ship, Krus­ing said: “We’re fo­cused on the work that the mem­bers and our board have en­trusted us to do.”

A spokes­woman for An­them, which also is an an­chor within the Blue Cross and Blue Shield As­so­ci­a­tion, said the in­surer con­tin­ues to be­lieve AHIP mem­ber­ship is “valu­able” and has re­newed for 2016.

Aetna’s months de­par­tureafter Unit­edHealth­from AHIP Group bolted is fur­ther ev­i­dence that the large na­tional in­sur­ers are in­creas­ingly happy to fight their own bat­tles on Capi­tol Hill.

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