UnitedHealth may lose 500,000 enrollees

  • Article by: ALEX WAYNE , Bloomberg News
  • Updated: September 19, 2011 - 8:45 PM

UnitedHealth Group Inc. may lose 500,000 poor elderly enrollees in its market-leading Medicare drug plan next year because of a premium increase, a study has found.

Premiums for the Minnetonka-based insurer's plan sold by AARP, the senior citizen advocacy group, are set to increase by 14 percent in 2012 on average, Avalere Health said in a report Monday. Premiums for competing plans from Humana Inc. sold through Wal-Mart Stores Inc. will rise only 2 percent.

"You have a number of plans that are taking aim at the market leader," said Dan Mendelson, chief executive officer of Avalere, a Washington, D.C., consulting firm, in a phone interview. Louisville, Ky.-based Humana's Wal-Mart plan carries the cheapest premium in the United States and will average $15.10 a month next year, his firm said. UnitedHealth's premiums will cost a monthly average of $39.70 in 2012, up from $34.82 this year.

UnitedHealth, with 4.8 million people enrolled in its Medicare drug plans, will lose about 535,000 subscribers in 2012 because premiums for its AARP plan are too high to qualify for federal low-income subsidies in most parts of the country, the Avalere report found. UnitedHealth's AARP plan has about 4.7 million subscribers.

Higher premiums are justified because UnitedHealth offers robust drug benefits designed to appeal to "the broader population," said Tom Paul, CEO of UnitedHealthcare Medicare & Retirement, the operator of the insurer's Medicare plans. He didn't dispute Avalere's findings.

"We have a very broad formulary, we've got a very broad network, this year we're the only national plan with no deductible," he said in an interview. "Those are the things that consumers have told us are really important to them."

UnitedHealth hasn't disclosed its projections for enrollment in Medicare drug plans, Paul said.

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