As Health Net Inc. considers selling off its Northeast health insurance business, the company revealed sharp drops in its large group market insurance business in Connecticut.
The California-based insurer has its main Health Net of the Northeast office in Shelton, where at last report it had 900 employees. Any sale to a regional insurer could jeopardize those jobs in a merger consolidation.
Health Net has also been an active supporter at the philanthropic and community level ”“ for instance, in mid-June it sponsors an Olympic distance triathlon at Indian Well State Park in Shelton to benefit the Boys and Girls Club of the Lower Naugatuck Valley, with the swim component in the Housatonic River.
Health Net says it wants to sell the units in order to focus on its insurance plans in California and Oregon, as well as its federal Medicare and TriCare military insurance plans. Government contracts were easily Health Net”™s fastest growing business in the first quarter, as the company tallied a $22 million profit on $3.9 billion in revenue, up 3 percent from a year earlier when it lost $36 million. The company”™s results were better than what analysts had expected, and its shares immediately gained 14 percent.
Earlier this month, Health Net CEO Jay Gellert met with President Obama, along with other insurance, hospital, physician and life-science industry stakeholders. As a group, they pledged to lower health-care costs by $2 trillion over the next decade, at an average savings of $2,500 for each family.
Health Net”™s commercial enrollment in Connecticut fell by 20,000 people in the first quarter to 144,000 members in all, a 12 percent drop from the fourth quarter of 2008. Nearly all of those members worked for large companies, with Health Net losing just 1,000 members on its policy rolls for small businesses.
As of last fall, Health Net had the second largest total enrollment in Connecticut with more than 300,000 members, trailing only the 500,000 members enrolled with WellPoint Inc.”™s Anthem Blue Cross & Blue Shield affiliate. On April 1, Health Net formally withdrew from Connecticut”™s Medicaid programs, as Aetna Inc. picked up 84,000 members after assuming a state Medicaid contract.
Health Net saw its New York commercial enrollment increase 2 percent to 229,000 members, and in New Jersey its member count increased by a slightly higher percentage to 78,000 members.
Despite the gains in New York and New Jersey, Health Net disclosed in January that it is considering selling off its Northeast business along with its operations in Arizona. In a conference call with analysts, Gellert acknowledged that it is taking longer to find a buyer than the company expected, and that the Northeast results have been strong. In Arizona, the company recently expanded its physician network by adding several hospitals that previously were unaffiliated with Health Net.
Health Net recently hired as a consultant David Colby, who is credited with leading the expansion of Indiana-based WellPoint Inc. and who will advise Health Net on engineering a similar turnaround.
“I think that the reason that it”™s taking a little longer is just the fact that the times are a little more volatile,” Gellert said. “We”™re seeing a slightly better pricing environment and maybe the speculation is getting our name in the paper and helping our marketing.”
