AWP, Medicare Part D Changing Health Insurance Landscape

• Click here for a list of the state's largest insurance companies.
Competitors were creeping up on Arkansas Blue Cross & Blue Shield in 2005, as premium data from the Arkansas Insurance Department shows. But the true picture of the health insurance landscape in Arkansas will be revealed when calendar year 2006 data becomes available next year.
ABCBS, by far the dominant health insurance company in the state, reported total Arkansas premium of $864.2 million last year — including almost $167.4 million for the Federal Employees Health Benefits Program. The Little Rock nonprofit company claimed total revenue last year of $920.5 million, up from $916.6 million in 2004.
No. 2 among health insurers doing business in Arkansas was nationwide giant United HealthCare, whose United HealthCare Insurance Co., United HealthCare of Arkansas Inc. and Golden Rule Insurance Co. subsidiaries combined for $249.6 million in in-state premium last year. Golden Rule specializes in individual health insurance policies.
Third and fourth places were maintained by HMO Partners Inc., the joint venture of ABCBS and Baptist Health that does business as Health Advantage.
The health insurance market in Arkansas changed dramatically on June 29, 2005. That's when the 8th U.S. Circuit Court of Appeals upheld most of the Patient Protection Act of 1995, the so-called "any willing provider" law that had been blocked for 10 years by a federal court injunction and a subsequent appeal. On Oct. 1, 2005, ABCBS began admitting to its provider networks any doctors, hospitals or other providers willing to accept the same reimbursement rates as previously contracted providers.
The AWP law also encouraged Sisters of Mercy Health System of St. Louis to introduce its Mercy Health Plans insurance product in Arkansas in May, adding to the competition for group insurance dollars.
Another factor that will change next year's list of health insurers was the introduction on Nov. 1, 2005, of Medicare Part D, the new and controversial coverage for prescription medications. Medicare recipients could choose from a large number of approved policies underwritten by private insurance companies — including Humana Insurance Co. of Louisville, Ky. Humana wrote more than $7.2 million worth of health premium in Arkansas in 2005 and is No. 7 on the list of health insurance companies.
"In 2006, Humana's membership in Arkansas increases substantially as a result of the Medicare Part D prescription drug coverage and our company's Medicare expansion," Mark Mathis, Humana's corporate communications manager, said in an e-mail to Arkansas Business. "As of Sept. 30, 2006, Humana had approximately 95,000 health plan members in the state of Arkansas. Of those, approximately 94,000 are Medicare members."
Humana offers a Part D drug policy; a combination Medicare drug and supplemental medical policy; and policies for individuals who have neither Medicare nor health coverage through an employers.
Another company that expanded into Arkansas specifically to take advantage of the demand for Part D plans is Arcadian Health Plan Inc. of Oakland, Calif. Arcadian announced last Decem-ber that it had established a subsidiary called Arkansas Community Care Inc.
Arkansas Blue Cross & Blue Shield naturally introduced a Medicare Part D plan, as well. Last week, the company announced that 350 independent and Farm Bureau insurance agents around the state had been trained and certified to sell its "Medi-Pak Choice" portfolio of policies for Medicare-eligible Arkansans beginning Jan. 1.

Costs Rising
The nonprofit Kaiser Family Foundation, which conducts an annual study of employer-sponsored health insurance, reported in September that the average cost of group health premiums grew 7.7 percent between 2005 and 2006. It was the slowest rate of increase since 2000, but it was also more than twice the rate of both general inflation and average wage growth.
And it probably doesn't represent a true slowing in the growth of health care costs, Dr. Joe Thompson, director of the Arkansas Center for Health Improve-ment, told Arkansas Business. Instead, he said, it is likely the result of employers shifting more of the risk onto the individual in the form of higher de-ductibles.
As of spring 2006, the average premium paid in an employer-sponsored group plan was $4,242 for single coverage and $11,480 for family coverage, the Kaiser study found.