Dive Brief:
- A little over a year after announcing plans to merge, SCAN Group and CareOregon have abandoned merger efforts, the insurers confirmed to Healthcare Dive on Thursday.
- The companies announced their intent to form HealthRight Group, a $6.8 billion health plan serving Medicaid and Medicare Advantage populations, in December 2022. The deal was expected to close in 2023, however it faced criticism during the public comment period. Oregon’s Medicaid Advisory Committee recommended the Oregon Health Authority disapprove the merger in December.
- As a result of the continued questions, the insurers mutually decided to withdraw their application to merge, a spokesperson confirmed to Healthcare Dive.
Dive Insight:
The tie-up between SCAN Health Plan, which provides Medicare Advantage plans to members in Arizona, California and Texas, and CareOregon, which provides Medicaid and Medicare Advantage plans to 500,000 Oregonians, was projected to cover nearly 800,000 members.
However, the deal was scrutinized by politicians and Oregon’s Medicaid Advisory Committee. The committee said it had “serious concerns” about the merger, including SCAN’s inexperience eliminating health inequities and the “flow of taxpayer dollars leaving the state.”
This winter, several politicians, including former Oregon Gov. John Kitzhaber, former Oregon Health Authority Director Patrick Allen and current state Rep. Travis Nelson, joined the campaign against the merger.
Ultimately, the proposed deal proved too unpopular to pursue.
“Our intent in coming together was to support Oregon’s healthcare system and the people that CareOregon serves,” said SCAN Group and CareOregon in a joint statement to Healthcare Dive on Thursday. “However, despite our efforts, there are still questions about our combination. As a result, SCAN Group and CareOregon have mutually agreed to withdraw our applications with the Oregon regulatory agencies and to terminate our affiliation agreement."
The now-scuttled merger had aimed to capitalize on the rising popularity of government-sponsored insurance plans.
Medicare Advantage plans in particular have soared in popularity in recent years with more than half of the Medicare-eligible population enrolled in an MA plan in 2023. MA enrollees tend to like their plans, and have better health outcomes than those enrolled in traditional Medicare.
However, in recent months insurers have reported diminishing returns on MA plans. Insurers’ earnings from MA were 2% lower in 2022 than in 2019, despite membership gains, according to a recent report from Moody’s. Health insurers may see their payment rates drop even further in 2025 if proposed CMS regulations are finalized.
