New ownership of QualChoice could create more jobs

Like in most states, the health insurance marketplace in Arkansas is dominated by one large company. Blue Cross & Blue Shield of Arkansas has about a 75 percent market share in the state. Groups like the Center for American Progress (CAP) contend that insurance market domination leads to fewer choices.

More than half of the health insurance market is controlled by two carriers in at least 39 states, said Ben Furnas and Rebecca Buckwalter-Poza, authors of a CAP study Healthcare Competition.

“This concentration limits employers’ and families’ health insurance options, as well as the care they receive,” the authors said.

The purchase earlier this year of one of the smaller health insurance companies in the state, QualChoice, by Catholic Health Initiatives (CHI), is considered a positive step in providing more balance in the insurance marketplace.

“We hope this will create more carrier competition in the state,” said David Wroten, executive vice president of the Arkansas Medical Association.

State Insurance Commissioner Jay Bradford said the purchase of QualChoice by a non-profit with more than $8 billion in surplus creates the ability to grow QualChoice.

“CHI has bought a very fine small company and, with their capacity, they can grow that company,” Bradford said. “It is good news for consumers in Arkansas and probably for multiple states. They have expanded in Arkansas right now, but plan to go into other venues. As an insurance commission, what we want is for our consumers to have a choice. CHI has already decided to go into all regions of Arkansas. Before, QualChoice wasn’t able to do that. That gives us another choice in all counties in the state. I’m very excited about it.”

More competition makes for a better price for consumers, Bradford said.

“All companies will be filing for their rates,” he said. “The fact that QualChoice is going to be expanding in the State of Arkansas may encourage other companies to know they have to be competitive to attract their consumers. Everyone will have to sharpen their pencils, hopefully.”

In addition to being positive for consumers, Bradford said that the purchase and expansion of QualChoice could also be a benefit for the healthcare community.

“If there are more payers out there, it certainly should be welcomed by hospitals and other providers,” Bradford said.

This new ownership creates significant opportunities for QualChoice and is also very good for Arkansas, said QualChoice President and Chief Executive Mike Stock.

“Through QualChoice, CHI expects to improve and expand access to affordable healthcare coverage, offering benefits and comprehensive care to more individuals in the markets we serve,” Stock said. “CHI will be in a better position to extend healthcare services to individuals who now have no insurance, making care more affordable and accessible, especially to those who are less fortunate.”

Juan Serrano, CHI’s senior vice president, payer strategy and operations, said their expectation is that through QualChoice, CHI expects to provide more competition in the marketplace.

“CHI regards Arkansas as an excellent place to invest in our health insurance operating capabilities and support our organization's health-plan business development,” Serrano said. “QualChoice is a key component of our future in this area, and Little Rock will be a transaction center for national operations. That means we expect more opportunities – and more job growth – in Little Rock and Arkansas.”

Some benefits of the increased competition were seen with the state’s private option Medicaid expansion. QualChoice provided some catastrophic plans and high value network options that were more affordable than the competition. QualChoice sold plans to 1,220 of the people who signed up for the private option Medicaid expansion. The private option Medicaid expansion allows people with incomes that are below 138 percent of the poverty level to enroll in government subsidized plans offered by private insurance companies.

There were issues prior to the acquisition whether providing healthcare plans that include coverage for contraception and abortions might be at odds with the Catholic Church’s position on birth control.

Arkansas Catholic, the official newspaper of the Diocese of Little Rock, reported that Bishop Anthony Taylor had reservations about the deal. Taylor said he was not convinced that CHI’s acquisition of QualChoice would pose no moral or ethical conflicts with Catholic principals.

The U.S. Conference of Bishops’ Ethical and Religious Directives for Catholic Healthcare Services prohibits the use of contraceptives and related reproductive services.

Access to contraception is a requirement of the Affordable Care Act.

“We don’t anticipate any changes to our benefit policies and procedures,” Stock said. “QualChoice has always complied with applicable state and federal regulations requiring specific levels of benefits and that will not change. CHI’s mission is to create and nurture healthier communities.”

Stock said that to the extent mandated benefits conflict with the Catholic Ethical and Religious Directives, QualChoice will institute appropriate administrative practices consistent with the way other Catholic organizations have operated health plans and continue to do so within the Catholic moral tradition.

QualChoice does not cover elective abortions. Therapeutic termination of pregnancy is covered, with preauthorization, only when determined to be medically necessary, such as when the mother’s life is endangered by continuation of the pregnancy.

CHI owns 89 hospitals in 18 states, including St. Vincent Health System in Arkansas. The non-profit has assets of $19.3 billion.