Less than a year after their proposed merger fell through, the two largest trade groups representing health insurers are competing for members in a struggle to survive.
The American Association of Health Plans appears to be winning, and it has lured away at least four insurers, representing 27 million insured people, from rival Health Insurance Association of America.
It also snagged HIAA's board chairman, William McCallum, president and chief executive officer of Great-West Life & Annuity Insurance Co. of Englewood, Colo. After McCallum resigned as HIAA chairman, he was named chairman-elect of the AAHP in July, and he took Great-West with him. He will take office Jan. 1, 2002.
Three other large insurers, Aetna, Trigon Blue Cross and Blue Shield of Richmond, Va., and Horizon Blue Cross and Blue Shield of New Jersey, announced they would not renew their HIAA membership.
Both the AAHP and the HIAA have been effective lobbyists on healthcare issues, including the recent debates on prescription-drug benefit plans and the patients' bill of rights.
At one point, it seemed that their voices would be much stronger. When merger discussions began in October 2000, the goal was to create a unified voice for the health insurance industry and improve insurance clout. But almost as soon as the merger talks went public, they collapsed (Dec. 18-25, 2000, p. 8), and the defections began.
McCallum said the defections were part of a natural evolution launched by the failed merger. Although both organizations represent health insurers, their history, political affiliations and membership differ considerably, with the HIAA seen as sympathetic to the Republicans and the AAHP to the Democrats.
Both groups are seen as Washington inside players. The AAHP represents about 1,000 HMOs and PPO members covering 150 million people; its president, Karen Ignagni, came to the organization from the more liberal and Democratic-leaning AFL-CIO. The HIAA, with nearly 300 members and 100 million insured people, represents traditional health insurers. The group's former president, Charles "Chip" Kahn, was a former campaign manager for former House Speaker Newt Gingrich.
Earlier this year, Kahn left the association to be president and CEO of the Federation of American Hospitals, a post vacated by Thomas Scully when he was appointed administrator for the Centers for Medicare and Medicaid Services.
"In my view there was nothing precipitating the departure, but it made sense to move after Chip had left and HIAA was recruiting new leadership," McCallum said.
In turn, McCallum's departure from the HIAA sparked the flight of several health insurance company members to the AAHP from the HIAA.
"It's no surprise that after failed merger talks there would be some membership juggling," said Washington lobbyist Randy Fenninger, a vice president at consulting firm MARC Associates.
Fenninger, who likened the process to a hostile shareholders' action, said the real question is the extent of the shift and how it will affect lobbying and the organizations' clout.
"The leadership of the HIAA board is setting a plan for how to move forward," said HIAA Senior Vice President Kathleen Harrington, who added that the plan has not yet been submitted and no date set for appointing a new permanent president.
"This is the way things go in this business," HIAA spokesman Joseph Luchok said. "Several have been members before and come back. We still represent over 290 companies and before this about 123 million covered lives. Our members are continuing to beat the bushes and bring in new members. We don't feel HIAA is in any way in any trouble here. We've been up and down this road before."
While Luchok discounted the defections as having no economic impact on the HIAA, he conceded that some members feel the insurance industry would be better represented by one unified voice.
AAHP Vice President Susan Pisano said her organization has added at least 12 company members to about 1,000 members representing 150 million lives since merger talks died last year.
Robert Reischauer, president of the Urban Institute and former director of the Congressional Budget Office, said the defections are part of the ebb and flow of membership in both organizations.
"These groups are hard to keep together because they have such a breadth of interests between them ranging from small insurers and plans specializing in Medigap policies to large health plans and insurers," Reischauer said. "But one wonders whether AAHP and Ignagni can serve all the needs of these companies. They might join only to find their interests aren't represented there either. One year ago I wouldn't have said one or the other was making a bigger splash, but clearly now the momentum is with the AAHP."