In the last month, managed care plans nationwide have moved to cancel or transfer coverage for more than a million patients. Last week, for instance, the nation's second-largest health insurer, UnitedHealth Group, announced it will sell to Blue Shield the policies of 225,000 of its least profitable California customers. Blue Shield would be able to increase fees or reduce coverage for these patients, something that would be legally tougher for UnitedHealth to do.
Transfers of what health insurers refer to as "covered lives" are on the upswing because companies are seeking to divest themselves of expensive patients to offset health care costs rising well ahead of inflation. Part of the impetus is new state mandates requiring them to provide specific benefits. For example, the nation's largest health insurer, Aetna Inc., was zinged Tuesday by Wall Street after announcing that second-quarter profits will be well below expectations; the company blamed new services mandated by various states.
Consumer advocates are urging President Clinton to rein in some of the terminations and transfers by requiring Medicare HMOs to serve all markets they are currently serving. Clinton, however, is unlikely to touch the issue out of concern he would be accused of meddling in the free market. Congress is just as unlikely to provide leadership, which leaves it up to state regulators.