It seems Western Pennsylvania is the mythical Lake Wobegon of regional health insurance markets -- all the carriers were above average in 2011.
Health insurer Highmark Inc. says it grew its Western Pennsylvania book of employer-sponsored business by 41,000 net subscribers in 2011, a flat performance given the size of the company, yet a victory in light of the ferocious local competition stemming from the ongoing feud between Highmark and UPMC.
But UPMC Health Plan, the second largest health insurer in the region, said in numbers released this morning that it added 37,000 commercial health subscribers in Western Pennsylvania last year, up 11 percent for the year. Commercial health subscribers are generally those who receive benefits through an employer-sponsored plan.
Some of those subscribers were its own employees, via its acquisition of the former Hamot Medical Center in Erie and its workforce of 3,500, but most were new additions -- and many came from Highmark, the company says. UPMC Health Plan also announced it is offering new individual plans, effective March 1, to compete with Highmark in that arena, too.
Along with Highmark and UPMC Health Plan, at least three of the region's other health insurers also say they've gained traction over the last 12 months.
Aetna gained nearly 40,000 customers last year, on top of the 70,000 or so it had at the start of 2011, putting it at about 108,000 customers in Western Pennsylvania, according to spokesman Walter Cherniak.
Cigna gained about 14,000 last year in the nine-county region that surrounds Pittsburgh, a spokeswoman said .
Meanwhile, a UnitedHealthcare spokeswoman said that it had grown in 2011 as well, adding to its commercial book and its Medicare and Medicaid divisions. A HealthAmerica spokesperson said the company doesn't release enrollment numbers by region.
Insurance brokers confirmed that Highmark's end-of-year numbers more or less reflected what they're seeing in the field -- that is, an absence of any large-scale defection from the Blue Cross Blue Shield insurer -- but they also said numbers can be misleading in the aggregate.
"We meet with carriers. They're telling us the same thing they told you -- we're all growing," said Norm Kerr, of Buck Consultants' health and productivity division.
"How the heck did everybody grow?"
Part of that growth may be organic, a slight rebound in the economy. Some of it may be tied up in national accounts -- large companies such as PNC, EDMC or Heinz -- that are counted locally because they are based in Pittsburgh, but have a lot of employees out of the region. And some may be sleight of hand, brokers said.
Regardless of how that universal growth might have been accomplished, this much remains true: The intense jockeying for customers also has led to some intense price competition, and as a result, discounts abounded last year.
"The pricing from everybody was very aggressive," said Jim McTiernan of Triad USA, a Pittsburgh benefits broker.
That's because 2011 was the first year in which the four smaller players in the Pittsburgh region -- Aetna, Cigna, UnitedHealthcare and HealthAmerica -- were all granted broad access to all of the hospitals and doctors in the UPMC network, via contracts signed with the health system last year. By granting that access, UPMC -- the hospital system, not the health plan -- hoped to create a more competitive health insurance climate and steer customers away from Highmark.
UPMC and Highmark are at loggerheads over the extension of their existing 10-year contract, which runs from 2002 through summer 2012. Highmark says it wants a new contract, while UPMC says it can't, and won't, negotiate with Highmark now that the insurer intends to assume ownership of the ailing West Penn Allegheny Health System.
By opening its network to other insurers, UPMC hoped those customers and employers that wanted to keep access to UPMC doctors would switch insurers. And, given the gains seen by UPMC Health Plan, Aetna and Cigna, it's hard to believe that hasn't happened, said UPMC spokesman Paul Wood.
"Those subscribers have to come from somewhere," he said. In information circulated as part of its financial update this week, UPMC Health Plan said "almost all" of its new membership came from Highmark.
But local brokers say the damage to Highmark has been minimal.
There wasn't a large shift to begin with, Mr. Kerr said, and the "Christmas gift" from UPMC -- the agreement that allowed Highmark customers to use UPMC physicians, as well as its hospitals, into 2013 -- might have also helped Highmark at the last hour.
"Some employers who had offered [multiple plans] allowed employees to go back and change their elections," meaning they were allowed to switch their plan away from the "new" carrier and back to Highmark, he said.
This week, Highmark reported total Western Pennsylvania-based membership of 3.1 million subscribers. Of that, it said, employer-sponsored business accounts for about 2.5 million in this region, not counting the central part of the state where it also does business. The remaining 600,000 are individual, Medicaid and Medicare enrollees.
The 2.5 million figure includes local business insured through both the mainline business (Highmark Blue Cross Blue Shield) and its HMO unit (Keystone Health Plan West), small businesses insured through its for-profit subsidiary (HM Health Insurance Co.), and its national clients, whose employees are usually split among Pittsburgh and other states.
Highmark also reported that its renewal rate in the competitive small-business market -- those companies employing between two and 50 people -- was nearly 90 percent.
In terms of larger, multi-state clients, "Highmark maintained our overall membership in Western Pennsylvania, while growing substantially nationally," Highmark spokesman Michael Weinstein said. The insurer's major loss last year came via the defection of Education Management Corp., which went to Aetna.
While the January 2012 renewal was viewed as the first important numbers test for Highmark, next year's January renewal period may be a better barometer. That's because the existing contract between Highmark and UPMC, with its built-in one-year run-out period, actually runs only into summer 2013.
Meaning next year might be the year that employers panic and switch insurers if they don't see any progress on the Highmark-UPMC standstill.
Bill Toland: email@example.com or 412-263-2625.