Healthy Texas Approves Centene, United Health

Healthy Texas aims to make health insurance affordable for small employers. The program leverages state dollars and federal grant funding with the potential for more savings from the federal tax credit for small businesses. Healthy Texas signed contracts with two insurance companies, Celtic Insurance (a division of Centene Corporation) and United Healthcare. ABJ reported:

A Premium Stabilization Fund will subsidize high-cost claims, shielding carriers from many large losses it would otherwise be exposed to. Insurance carriers in the program will be reimbursed for 80 percent of claims between $5,000 to $75,000. Carriers will cover the cost of claims below $5,000.
“Because the carriers have some protection, they are able to lower the premiums,” said Amy Einhorn, project manager for Healthy Texas.
The $35 million Premium Stabilization Fund is designed to last at least two years. Legislators will need to reauthorize funding if it’s to continue beyond that.

Centene also received a lucrative contract from Illinois for Medicaid HMO services. It will enroll 40,000 Medicaid recipients into a managed care program. Managed care became very unpopular in the late 1990's to early 2000's, due to restricted access to specialists and high out of network deductibles and co-payments. It's now the main method for covering the poor. Centene also provides public insurance coverage in Massachusetts and Arkansas.

Centene, like BP, was a Founder level sponsor of the Southern Governors' Association recent meeting. The SGA highlighted the Texas deal.

Centene's board members include Tommy Thompson and Dick Gephardt, while United Healthcare has Gail Wilensky and Richard Burke, one father of the HMO. It's unclear how they will personally benefit from providing insurance for the poor and disabled.

Should Healthy Texas run out of money, I know where they can find $35 million plus interest. However, The Carlyle Group could own Centene by then.

Update 1-6-13:  Centene is sponsoring President Barack Obama's inauguration, Part Deux.