Medical Mutual acquires insurance from HealthSpan

Diving Brief:

  • Medical Mutual announced the acquisition of HealthSpan, a former Kaiser Permanente insurance company in Ohio, according to Crain’s Cleveland Business report.
  • HealthSpan will continue to cover members of its employer-sponsored plan through their renewal date or August 31, whichever comes first, and coverage for individual members through December 31.
  • Medical Mutual’s director of communications, Jared Chaney, said it will offer plans comparable to those offered by HealthSpan and will likely have the same doctors in its network.

Overview of the dive:

HealthSpan’s operations will cease on January 1, 2017. The company announced earlier this year that it planned to dissolve its medical group and move forward solely as an insurer. However, the tough market competition proved too much.

“We were a small plan and were unable to achieve the growth needed to be sustainable or viable in the market,” HealthSpan spokesperson Chuck Heald said.

Mergers and acquisitions between health insurance companies and hospitals have gained momentum in recent years, with the Anthem/Cigna and Aetna/Humana mega-mergers still awaiting a final decision from the Justice Department.

The individual market stumbled and UnitedHealth threatened to pull out of exchanges due to losses. Humana announced in a filing with the Securities and Exchange Commission (SEC) last month that it expects financial losses and a drop in business memberships of up to 300,000 from its Affordable Care Act plans ( ACA), as reported by FiercHealthPay.