UnitedHealth Loses Two Big Accounts – Big Wins for Humana & Aetna

UnitedHealth Group Inc. will lose two large customers in its retiree health-care business next year, a setback for the insurer in an increasingly competitive marketplace for senior medical benefits.

UnitedHealth loses two big accounts to rivals

Bloomberg 17 Oct 2019 by John Tozzi and Scott Moritz

UnitedHealth Group Inc. will lose two large customers in its retiree health-care business next year, a setback for the insurer in an increasingly competitive marketplace for senior medical benefits.

Verizon Communications Inc. will no longer offer UnitedHealth plans to retired workers in its western region starting in 2020, according to people familiar with the matter. A state-sponsored plan for some retired Alabama public employees also will drop the insurer’s coverage, according to information posted on an Alabama government website.

Many large employers have historically offered health benefits to retirees, including private coverage before they turn 65, and add-on benefits once they become eligible for Medicare, such as help with out-of-pocket costs. As companies try to limit retirement expenses, they’ve shifted former workers into private Medicare plans, an attractive business for insurers who can pick up lots of new members.

Verizon will stick with UnitedHealth for retiree benefits in its eastern region, one of the people said, but the account for its western region will go to CVS Health Corp.’s Aetna division. The change was made to get more competitive bids from vendors, the person said.

UnitedHealth will retain the majority of New York-based Verizon’s retirees, according to a person familiar with the situation. UnitedHealth serves more than 1.4 million retirees in its group Medicare Advantage business for about 500 clients, the person said.

The Alabama Public Education Employees Health Insurance Plan is shifting retirees to Humana Inc. Medicare Advantage plans, according to documents posted online.

Verizon “moved a large cohort of retirees — not the entire portfolio” to Aetna’s group Medicare Advantage plan effective January 1, said T.J. Crawford, a spokesman for CVS’s Aetna unit, in an email. A representative for Humana didn’t respond to requests for comment.

Retirement Plans

The defectors were high-profile parts of UnitedHealth’s group retirement business, one of the people said.

There were more almost 87,000 retirees and spouses receiving benefits through the Alabama plan as of Sept. 30, 2017, according to the system’s website. Not all of them may have been on the UnitedHealth Medicare Advantage plan, as some retirees may not be eligible.

Verizon has a total of 200,000 retirees, according to an estimate by Jack Cohen, chairman of the Association of BellTel Retirees Inc.

UnitedHealth covers 5.23 million people through Medicare Advantage, including people who purchase the coverage individually. Humana and Aetna are also big players, and other insurers who haven’t had as large a slice of the market in the past are increasingly targeting it for growth.
On Tuesday, UnitedHealth beat analysts’ forecasts and raised its earnings guidance for 2019, results that sent its shares surging more than 8%. Executives said the market for its commercial health plans for workers was also competitive.

“As we look into 2020, we had a few national account losses,” Dirk McMahon, head of the company’s insurance unit, UnitedHealthcare, said on a conference call after the results were released.
McMahon said the insurer has had to defend more accounts than in prior years, but that the account departures wouldn’t have a material impact.

Copyright Bloomberg News

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