Insurance business will be sold
Premier Health to sell division to Evolent Health after $40M loss.
Premier Health is selling its insurance business, which it has lost more than $40 million dollars on in the two years since its launch, according to an independent analyst.
The region’s largest health network said in a statement Thursday afternoon that its insurance business “Premier Health Plan” will be acquired by Evolent Health, a Virginia-based firm that’s been partnered on the plan since its launch.
When the plan was launched, Premier had said it was starting an insurance arm in part to sell health insurance on the exchanges created by the Affordable Care Act.
But in June, Premier announced it was leaving the federal health insurance exchange “in the face of significant uncertainty surrounding the future direction of U.S. health care policy.”
Hospital systems across the country dove into the health insurance business after 2010 when the Affordable Care Act created a flood of new customers to buy their policies.
But the move has proved a risky endeavor that almost all of these systems lost money on.
“This has been a very difficult environment for start-up health insurers,” said Allan Baumgarten, and independent analyst based in Minneapolis who authors a semi annual report Ohio Health Market Review.
Citing Ohio Department of Insurance data, Baumgarten said his reports found Premier Health has lost millions on its insurance business.
Premier’s health insurance business is incorporated under two separate names and licenses. Premier Health Insuring Corp., which has its Medicare Advantage business, lost $21.3 million in 2016. Premier Health Plan, which had its individual plans, lost $9.9 million.
For the first half of 2017. Premier Health Insuring Corp. lost $9.9 million and Premier Health Plan lost $3.7 million.
The turmoil in the Affordable Care Act insurance marketplaces has been difficult on these new hospital-run insurance plans.
The exchanges have not had great success attracting enough young, healthy people to offset
the high costs of older and sicker policy holders.
In Ohio, there will be about half as many insurance companies selling ACA plans next year, with most citing sustained financial losses and the political uncertainty surrounding the health law as the reason they left.
“The regulatory landscape has changed dramatically from the time that Premier Health made the decision to enter the health plan market,” Premier said in a statement. “Key aspects of the Affordable Care Act were either not enacted or drastically changed.”
Premier said it started the health plan in 2014 in recognition of the changing landscape of health care reimbursement, which is shifting from fee-for-service to paying for healthy outcomes.
“The strategy was intended to help Premier Health gain the skill set needed to manage risk-based contracts focused on payment for outcomes versus the traditional fee-for-service payment models,” Premier stated. “Through the strategy, Premier Health learned how to manage total cost of care and gained experience in deploying clinical interventions to improve the population’s health.”
Baumgarten said government and commercial insurers have been changing the way they pay to a model that pays better when health care is efficient, instead of paying more for more when more services are given.
He said hospitals saw that if they were more efficient, insurance companies like Anthem and UnitedHealthcare reaped most of that benefit, and the hospitals wanted to have their own insurance companies so they could benefit. But, he said, that goal is a hard thing to achieve and come out financially ahead.
“The fact is, it’s very hard to be more efficient. It’s very hard to delivery high quality and save money that way,” he said.