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Read Making a Killing

home / healthcare / in the media

Sacramento Bee
Jul 15, 2000

by Jean P. Fisher

INSURERS SET TO TRADE 225,000 MEMBERS

UNITED HEALTHCARE, BLUE SHIELD IN DEAL
The nation's No. 2 health insurance company plans to pass off about 225,000 members to Blue Shield of California in a deal that could boost Blue Shield's membership in the state by more than 10 percent.

Under the agreement announced Friday, members of UnitedHealth Group's California subsidiary United Healthcare would become Blue Shield members, although they would have the option to forgo Blue Shield for another carrier, provided their employer offers a choice.

"Obviously we are going to do everything we can to get those members to enroll with Blue Shield," said Bruce Bodaken, the plan's chairman and chief executive. "But no one will be forced to enroll with us."

The agreement already has drawn criticism from at least one consumer advocate and will need the approval of state regulators.

Blue Shield, one of the state's largest nonprofit health plans with about 2.1 million members statewide, has developed plans with prices and benefit levels similar to those already held by United Healthcare members. The company has agreed to pay about $111 to United for each member that signs on with Blue Shield.

That could make the transfer worth nearly $25 million to United, a publicly held health insurer based in Minneapolis.

United members who cross over to Blue Shield would likely be able to keep their current doctors, most of whom contract with both plans, Bodaken said. They also would gain access to Blue Shield's larger, 42,000-strong provider network. United's provider network includes about 32,000 physicians and medical facilities.

The transfer would not affect AARP members in California who have Medicare supplement or hospital indemnity coverage through United.

UnitedHealth Group would retain about 700,000 California enrollees, including about 100,000 Pacific Bell employees, who are covered through another subsidiary, Uniprise, that caters to large companies.

United has 3,500 members in the Sacramento region, with about 2,100 in Sacramento County.

As part of the deal announced Friday, United would lease access to Blue Shield's physician and medical facility network to give Uniprise members a broader choice of providers.

The agreement with Blue Shield would effectively get United out of the small- to medium-sized group market in California. The company will now focus on companies with 5,000 or more employees that may have multiple locations in more than one state. United's 14.5 million members make it the nation's second-largest health insurer.

"United has decided that what they do best is take care of that segment of the market," said Don Prial, a spokesman for United's California operations. "Blue Shield has a strong track record in serving the small-to-medium markets. It's just a good fit."

Not everyone thinks so.

Managed-care critic Jamie Court of the Santa Monica-based Foundation For Taxpayer and Consumer Rights, criticized the deal as a "bait-and-switch" tactic that would shunt consumers who signed up with United into Blue Shield plans.

"Giant HMOs should not be able to trade patients like they were trading in used cars," said Court, who has asked the state Department of Managed Care to quash the agreement.

Bodaken said the deal provides ample room for United Healthcare members to decline Blue Shield membership.

"Perhaps Mr. Court should wait until he knows more of the details before he criticizes," he said.


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