For the first time in two decades, Minneapolis-based UCare experienced a CEO transition when Nancy Feldman in June stepped down chief executive. Jim Eppel takes the top job at a time when UCare is expanding beyond its traditional focus on Medicaid and Medicare health plans, and joins the turbulent waters of the state’s individual health insurance market. That’s the market that includes the state’s MNsure exchange, where UCare currently has about 20 percent of sign-ups. It’s also the market where health insurers currently are proposing big premium increases for 2016. The insurance industry is undergoing fundamental changes with the federal Affordable Care Act, but it’s familiar territory for Eppel. His career has spanned some of the biggest names in the Twin Cities health care market, including Allina Health System, Blue Cross and Blue Shield of Minnesota, Medica and the Optum division at UnitedHealth Group.
Q: Are there unique challenges to becoming CEO when your predecessor has had the job for 20 years?
A: One of the beauties of having a CEO like Nancy Feldman who gave a year’s advance notice of her intent to retire is that the board, the search committee, the senior team could put together a very thoughtful transition process.
We held all-employee meetings, where Nancy very graciously introduced me to virtually all of the employees of the company, and did, if you will, kind of a symbolic handoff. I think that went a long way to allaying any fears somebody might have.
Q: What’s your vision for UCare and where the organization needs to go?
A: The beauty of UCare is: I come into an organization that has a history of great success, of great growth, of doing wonderful things in the marketplace. Nothing’s broken. Nothing’s on fire. Nothing needs to be fixed.
I just need to listen, and formulate with the senior team and the board where we need to go in a number of dimensions.
Q: You’re taking over at a time when the largest for-profit health insurance companies in the country are making a lot of noise about mergers and consolidation. Will that happen to nonprofit carriers, too?
A: Obviously, it’s a time of great change in the broader health care world, in all parts of the country. One of the beauties of our marketplace is … we are all local players, very much focused on the local marketplace. We hold each other accountable, we challenge each other in a positive way, and we can have conversations with one another.
That’s very different from national players talking to national players. So, I think that local market focus and the relationships that we built and the trust that we have really keeps this market focused on what it should be focused on — which is not about growth for growth’s sake, or getting bigger for the sake of getting bigger, but just about doing the right thing for the marketplace.
Q: From that response, I infer that you would not expect consolidation or mergers locally. Is that right?
A: I’m not aware of anything right on the horizon, no.
Q: What sort of work did you do with Optum?
A: I spent some time working with MNsure, the insurance exchange. I spent a little bit of time working on the federal exchange. I worked with folks around the country, both providers and payers, on particular issues they were trying to address. It was a different focus in terms of a national focus. … Now I find myself back with very much a local market focus.
Q: In 2014, UCare increased revenue by 27 percent to about $3 billion, and more than doubled operating income to $95.3 million. What is the outlook for revenue and income in 2015? Do you expect considerable growth yet again, or is it more of a stay-the-course kind of year?
A: I think it’s more of a stay-the-course kind of year. We’re very pleased with the results of our initial foray into the insurance exchange and our commercial enrollment.
Q: When you think about UCare or the industry more broadly, what was surprising about the first year of major insurance market reforms under the health law in 2014?
A: For those of us who have worked in the industry for a long time, there weren’t a lot of surprises.
I think we all knew that the magnitude of change was large, that there were going to be a lot of shifts in terms of how people purchased coverage, the information available to them, how risk was borne among the various providers, and there was a little bit of unpredictability, as we all know, about exactly the magnitude of the change and how it would affect the various parties. …
So, no big surprises. I think the — I’ll call it, turbulence — was expected.
Q: There were big premium increases in the individual market for 2015, when PreferredOne dropped out of MNsure after being the largest carrier on the exchange. In June, health insurers proposed big rate in increases for 2016, including jumps of more than 50 percent. Do you think the individual market is in trouble?
A: I don’t think it’s in trouble, no. I think it’s in a state of turbulence. When we talk about rate increases, we have to go back and really look at underlying health care costs as the base. If you focus on rate increases, you get one perspective. If you look at what health care costs are on a per member basis in the state of Minnesota, they’re the lowest in the country
Now, at the same time, I think what we’re all realizing is that we have a lot of work to do in the individual market as we sort of get used to and process this transition to new ways of purchasing products. … This is one area where my hope is that all of us who we would consider each other competitors, this is an area where we have to collaborate and really make sure that this individual market works for all constituents.