The nonprofit health insurers SCAN Group and CareOregon plan to merge and create a $6.8 billion company focused on government health plans, the companies have announced. father on Wednesday.
SCAN group and CareOregon intend to partner as HealthRight Group. SCAN Group CEO Dr Sachin Jain will lead the combined company and CareOregon President and CEO Eric Hunter will be HealthRight’s executive chairman of Medicaid.
SCAN Health Plan and CareOregon and the brands will continue to operate, and CareOregon will maintain its own separate board of directors, community advisory boards, and staff. HealthRight Group will have about 3,000 employees and include nearly 800,000 members, according to the companies.
Insurers expect the transaction to close next year, subject to regulatory approval. HealthRight Group will focus solely on paying Medicaid and Medicare beneficiaries, while competing with for-profit insurers such asCenteneMolina Healthcare and Humana, Jain said.
“We think we have achieved something that will become a model for how nonprofits in the region can compete,” says Jain. “There is increasing scrutiny over the administration of the Medicare and Medicaid programs, and there is the right way to do these programs and the wrong way. We are extremely committed to being a force for good in the healthcare industry.”
The proposed merger represents a proactive effort by both insurers to ensure sustainability in the face of growing threats of provider and insurer consolidation, Jain said. for profit and investor support to enter the market and gain market share at a low premium, Jain said. “Scale matters in healthcare. You see it with Bright and Oscar signing on to their health plans,” he said.
CareOregon will bring about 515,000 members, most of them Medicaid, into the combined company. SCAN Group, the second largest nonprofit Medicare Advantage insurer, will attract about 275,000 members. SCAN Group gained attention last year when it increased the number of Medicare Advantage members 17% during the open enrollment periodoutperformed the industry average by 3% and gained market share from Alignment Healthcare, Humana and Bright Health Group.
Government-funded insurance is a bigger business than ever. The economic impact of the COVID-19 pandemic and states’ pause to redefine beneficiary eligibility during a federal public health emergency have led to an increase in Medicaid enrollment, reached 90 million in August, according to Centers for Medicare and Medicaid Services data compiled by the Kaiser Family Foundation. And nearly half of Medicare enrollees are expected to sign up for Medicare Advantage plans this year.
“There are fewer and fewer community-based health insurance plans in this area,” says Jain. “We believe the government program space, in particular, is a really important space for nonprofits because of what people expect when they think about government programs. like Medicare and Medicaid is the ethical management of these programs.”