Health-care Stocks: Medicaid insurers surge on Amerigroup deal

By Russ Britt, MarketWatch

LOS ANGELES (MarketWatch) — Medicaid insurers surged in early trading Monday, anticipating a reshuffling among health carriers after WellPoint Inc. announced plans to buy Amerigroup Corp. for a 43% premium.

Shares of Amerigroup /quotes/zigman/265070/quotes/nls/agp AGP +38.17%  , a player in Medicaid coverage, were catapulted by 38% after WellPoint /quotes/zigman/362231/quotes/nls/wlp WLP +3.17%  , one of the nation’s biggest insurers, agreed to pay $92 a share for the company, or $4.9 billion. Amerigroup shares were up $24.46 to $88.80 while WellPoint shares were up nearly 3% to $61.50.

Health insurer WellPoint is buying Amerigroup for $4.9 billion, bringing together two major health-care carriers. (Photo: Associated Press)

The news sent shares of other Medicaid insurers soaring, as the market apparently now expects more mergers in the wake of the Supreme Court’s ruling on President Barack Obama’s health-care overhaul bill. The ruling preserved the federal expansion of the Medicaid program for indigent patients, though the court ruled that it’s not mandatory for states to participate.

Fellow Medicaid insurer Centene Corp. /quotes/zigman/292665/quotes/nls/cnc CNC +19.32%  posted a 20% gain to $34.73 on the news. Other Medicaid insurers to bask in the glow were WellCare Health Plans Inc. /quotes/zigman/341770/quotes/nls/wcg WCG +18.47%  , which was up more than 18% to $62.39, while Molina Healthcare Inc. /quotes/zigman/317140/quotes/nls/moh MOH +16.78%  surged by 14% to $26.31.

Analysts said, however, that WellPoint wasn’t reacting to the Supreme Court ruling by making the deal for Amerigroup. The move allows WellPoint to have substantial lines of business in both Medicare and Medicaid.

But the deal will also allow Indianapolis-based WellPoint to benefit from the Medicaid expansion, analyst Chris Rigg of Susquehanna Financial Group said in a morning note to clients.

“There is uncertainty around states’ willingness to participate in the expansion program but if all states opt in, approximately 17 million uninsured lives are expected to be covered through Medicaid expansion,” Rigg wrote. He added that the new company would have a presence in the four largest dual-eligible states, with potential revenue of $100 million.

Deutsche Bank’s Scott Fidel concurred, adding that Amerigroup, headquartered in Virginia Beach, Va., was probably the best-positioned Medicaid player.

“This acquisition significantly enhances WellPoint’s Medicaid franchise providing the company with the best pure-play asset and management team in Medicaid managed care, in our view,” Fidel said in a note to clients.

Russ Britt is the Los Angeles bureau chief for MarketWatch.

View the original article here

New Study: Expanding Medicaid Reduces Access to Health Care

Ted Kennedy helped to create the S-CHIP program. Image via Wikipedia

Chapin White of the Center for Studying Health System Change has published an important new paper in Health Services Research, a journal of health economics, which suggests that a critical part of the Affordable Care Act—its expansion of Medicaid coverage to 16 million more Americans—may actually reduce those individuals’ access to health care.

White’s report comes on the heels of numerous studies that show that patients on Medicaid, our national government-run health-care program for the poor, do far worse on health outcomes than do those on private insurance, and in some cases, worse than those with no insurance at all. (For an extremely deep dive into these studies, see my three-part series on the topic.)

Medicaid underpays doctors for their expenses

Why does this occur? The main reason is that Medicaid underpays doctors and hospitals to care for Medicaid beneficiaries. Medicaid’s reimbursement rates are around half of those paid by private insurers. In many cases, Medicaid pays doctors less than it costs to care for Medicaid patients, meaning that doctors face the choice of caring for the poor, and going broke, or shutting their doors to Medicaid patients. One survey found that internists were 8.5 times as likely to accept no Medicaid patients at all, relative to those with private insurance. Another found that two-thirds of kids on Medicaid were denied a doctor’s appointment for a serious condition, relatively to only 11 percent for the privately-insured.

Believe it or not, physicians even do better caring for the uninsured than they do caring for Medicaid patients. Two MIT economists, Jonathan Gruber and David Rodriguez, have found that three-quarters of physicians receive lower fees for serving Medicaid patients than they do for the uninsured, because many people without health insurance are still able to pay out-of-pocket for routine health expenses. (Ironically, Gruber was the intellectual father of Obamacare, and remains an outspoken advocate of the law.)

Overall, Medicaid expansions do not lead to more doctor visits

Chapin White looked into this problem by examining the State Children’s Health Insurance Program, or S-CHIP, which was created by Congress in 1997 as a way of expanding Medicaid to lower-income children who were above the income thresholds of traditional Medicaid. He found that CHIP was “not associated with any change in the aggregate quantity of physician services [consumed],” and concluded that “coverage expansions…do not necessarily increase physician utilization.”

The main reason for this non-effect, he surmised, was due to the fact that CHIP paid physicians less for their time and expenses. “Increasing Medicaid fees,” he wrote, “is…clearly related to a reduction in non-[cost-sharing]-related access problems among both low- and high-income children.”

White compared children in states which had undergone large CHIP expansions, and compared them to children in states with smaller expansions. He also examined increases versus decreases in Medicaid physician fees. He found, surprisingly, that physician utilization was lower in the states with the largest CHIP expansions, and that expansions of CHIP led many children to lose private insurance as the government program crowded out the private sector. “Supply-side effects of CHIP—either the use of managed care tools or the relatively low reimbursement rates, or both—may have limited the utilization effect of the coverage expansion,” White concluded.

PPACA’s Medicaid expansion could worsen physician access

As the below table shows, 11 percent of children in the lowest income quartile, who were uninsured, gained insurance; however, 13 percent of children in that quartile who had private insurance lost it, while Medicaid/CHIP expanded by 23 percent of children. In other words, for every two children who gained Medicaid coverage, one lost private coverage.

In the third-lowest and second-lowest quartiles, the proportion of those gaining Medicaid coverage and those losing private coverage were almost identical, suggesting that Medicaid was replacing private coverage in the majority of cases. Those individuals who are subject to the replacement will have poorer access to health care, because Medicaid pays less than private insurance. It is this cohort, represented especially by White’s third-lowest quartile, that is subject to Obamacare’s expansion of Medicaid.

White concludes: “In general, these findings argue strongly against the idea that the effect of expanding utilization can be deduced simply from the reduction in patient cost sharing…Coverage expansions by themselves do not necessarily spur increases or decreases in overall utilization.”

Put more simply, health insurance is not the same thing as health care.

(This article originally appeared in The Atlantic, where I am guest blogging for Megan McArdle for two weeks.)

Follow Avik on Twitter at @aviksaroy.

View the original article here

Health Net of California Earns NCQA Multicultural Health Care Distinction for Its Commercial and Medicaid Lines of ...

Thu, Feb 23, 2012, 1:36 PM EST - U.S. Markets close in 2 hrs 24 mins

Sorry, I could not read the content fromt this page.

View the original article here

WellCare's 'Ohana Health Plan Selected to Serve Hawaii's Quest Medicaid Program

Tampa, Florida (January 23, 2012) - WellCare Health Plans, Inc. (NYSE: WCG - News) today announced that the Hawai`i Department of Human Services awarded `Ohana Health Plan (`Ohana), a health plan offered by WellCare Health Insurance of Arizona, Inc., a contract to serve Hawaii`s QUEST Medicaid program.

`Ohana is one of five health plans selected to serve approximately 230,000 beneficiaries across the state. Beneficiaries of the QUEST program include low-income individuals, families and children who are not aged, blind or disabled. Services are expected to begin on or about July 1, 2012, and `Ohana will coordinate medical, behavioral and pharmacy services with a focus on improving health care access and the quality of care. The award is conditioned on the execution of a definitive contract.

`Ohana currently serves approximately 26,000 Hawai`i residents through its Aged, Blind, and Disabled Medicaid and Medicare Advantage Plans.

About WellCare Health Plans, Inc.

WellCare Health Plans, Inc. provides managed care services targeted to government-sponsored health care programs, focusing on Medicaid and Medicare. Headquartered in Tampa, Florida, WellCare offers a variety of health plans for families, children, and the aged, blind, and disabled, as well as prescription drug plans. The company served approximately 2.4 million members nationwide as of September 30, 2011. For more information about WellCare, please visit the company`s website at www.wellcare.com.

Cautionary Statement Regarding Forward-Looking Statements

This news release contains "forward-looking" statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as "expects," "anticipates," "intends," "plans," "believes," "estimates," and similar expressions are forward-looking statements. The company`s financial outlook contains forward-looking statements. Forward-looking statements involve known and unknown risks and uncertainties that may cause WellCare`s actual future results to differ materially from those projected or contemplated in the forward-looking statements. These risks and uncertainties include, but are not limited to, WellCare`s progress on top priorities such as improving health care quality and access, ensuring a competitive cost position, and delivering prudent, profitable growth.

Additional information concerning these and other important risks and uncertainties can be found under the captions "Cautionary Statement Regarding Forward-Looking Statements" and "Risk Factors" in the company`s Annual Report on Form 10-K for the year ended December 31, 2010, and other subsequent filings by WellCare with the U.S. Securities and Exchange Commission, which contain discussions of WellCare`s business and the various factors that may affect it. WellCare undertakes no duty to update these forward-looking statements to reflect any future events, developments, or otherwise.

CONTACTS:
Investor relations
Gregg Haddad
813-206-3916
gregg.haddad@wellcare.com

Media relations
Denise Malecki
813-206-2747
denise.malecki@wellcare.com

WellCare News Release -- QUEST Medicaid Award
This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients.

The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of the
information contained therein.

Source: WellCare Health Plans, Inc. via Thomson Reuters ONE
HUG#1579613

View the original article here