Understanding the Influence of Publicly Traded Health Plans on Medicaid Managed Care

Publicly traded firms have increasingly exerted influence on Medicaid managed care over the past five years. In mid-2006, nine investor-owned, multi-state companies represented about one-quarter of all plans and about one-third of the beneficiaries in Medicaid managed care plans. Expanded presence of the publicly traded firms merits a thoughtful, objective assessment. The activities of these firms and their strong interest in growth, have bolstered the Medicaid market in several states by favorably influencing state policies and payment rates, by increasing the numbers of bidders and contractors, and by enabling some states to launch in, or expand programs to, new populations and new geographic areas. On the other hand, the magnitude of profits made by some of these firms has raised concerns in the policy community. A broader concern is the possibility that if this line of business does not demonstrate the growth in earnings expected by investors, the firms could fail and/or exit the Medicaid market, leaving states in a difficult position.

The influence of publicly traded or multi-state investor-owned plans (terms used interchangeably in this report) on Medicaid managed care was studied by performing four related tasks:

• Documenting market participation trends
   
• Reviewing the most recent financial and non-financial performance indicators
   
• Conducting interviews in seven states with substantial publicly traded firm participation
   
• Interviewing 26 selected Medicaid policy and managed care experts

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