Big insurer defections signal AHIP's fading clout

Managing members of a trade group is often like herding cats. Worse, actually. All kinds of cats—tabbies to lions. And the strain of corralling consensus is starting to fracture America's Health Insurance Plans, as the industry's for-profit giants grow even bigger and their priorities diverge from the interests of their smaller and not-for-profit peers.

Aetna's departure from AHIP months after UnitedHealth Group bolted is further evidence that the large national insurers are increasingly happy to fight their own battles on Capitol Hill, such as shepherding their pending mega-mergers and negotiating changes to the ACA marketplaces.

Some in the industry are murmuring that Marilyn Tavenner, the CMS' former administrator, is the wrong person to lead AHIP during this growth phase of the Affordable Care Act.

Tavenner took over AHIP's helm last year from Karen Ignagni, the group's longtime chief who commanded Washington's attention but left to lead New York City-based health insurer EmblemHealth.

Observers have hailed Tavenner for her ability to win support from both sides of the political aisle, but some industry sources believe she has focused too much on cooperating with the Obama administration rather than advocating for their specific business issues.

“Tavenner was never the pick of the major carriers, and she is perceived as too much of a shill for the White House, despite maintaining an image of objectivity,” an unnamed AHIP board member told InterPro, an insider insurance newsletter.

The AHIP board unanimously elected her CEO in July. The association said Tavenner was not available for an interview.

Losing members as large as Aetna and UnitedHealth certainly chips away at AHIP's political influence. UnitedHealth is the nation's biggest insurer by revenue—expected to total more than $140 billion for 2015—and now has 46.1 million covered lives.

Aetna will have 33 million medical members if it nabs approval for its Humana transaction. Both companies have cannibalized AHIP's membership over the past several years by acquiring competitors and now may be outgrowing the group.

“These big companies now have such a significant private lobbying clout, they think having to deal with the aggravation of association politics just isn't worth it,” said Bob Laszewski, a health policy consultant.

Indeed, Aetna, Anthem, Cigna Corp., Humana and UnitedHealth all spend millions of dollars on lobbying each year outside of AHIP, and they previously had their own loose coalition. And Aetna, Humana and UnitedHealth are the founding members of Washington's newest health insurance lobbying group, the Better Medicare Alliance, which focuses on Medicare Advantage. The big five also have built up their own government relations offices in Washington.

“You look at it now, they're huge,” said an industry source who asked not to be identified. “I bet if you totaled up the number of people in those offices, it would almost compare in size to the AHIP advocacy staff.”

This isn't the first time the insurance industry has had problems uniting behind one major lobbying voice. Before AHIP was formed in 2003, insurers were split into two camps: the Health Insurance Association of America, the main group, and the American Association of Health Plans, which catered to the HMO industry. Those two organizations ultimately merged.

But the large carriers, which have ballooned in size over the past decade through mergers and acquisitions, may feel as if their voices do not carry enough weight within AHIP anymore. Aetna hired five outside lobbying firms to push the federal government to approve its deal. Anthem and Cigna also tapped hired guns to help with their pending merger.

The big five's other most pressing priorities include bolstering the increasingly profitable Medicare Advantage program by keeping payment rates stable, and changing the ACA's individual market. The exchanges have been of particular concern. Each big-five insurer is either losing money on the plans or is performing below expectations. They've asked the Obama administration to scrap efforts to standardize plan options and impose minimum requirements for provider networks.

AHIP has fought for those issues. But it also has to worry about Medigap policies and other smaller, ancillary products like vision insurance, which barely register on the giants' radar but are the lifeblood of some of AHIP's specialized members.

“Maybe the bigger question is, why did AHIP hold itself together this long?” Laszewski said.

Aside from amplifying their own lobbying muscle, big insurers may see a financial benefit in ditching AHIP. Membership dues for the largest companies are estimated to cost at least $1 million, and perhaps more, according to industry sources. AHIP and individual insurers did not disclose figures.

AHIP spokeswoman Clare Krusing said the association holds conferences and events to build revenue and keep fees stable, and its board is considering other unspecified changes “to increase advocacy.” The next major AHIP board meeting is in March.

Aetna's departure “is certainly significant for AHIP and a further sign of the post-ACA market dynamics,” said Kip Piper, a D.C.-based consultant and former CMS adviser. “Dropping the AHIP dues cuts a major administrative expense at a time when insurers are under greater margin pressure and increased visibility on Wall Street.”

Unum, a disability and supplemental insurance company, has also left AHIP. When asked if the association was worried more members might jump ship, Krusing said: “We're focused on the work that the members and our board have entrusted us to do.”

A spokeswoman for Anthem, which also is an anchor within the Blue Cross and Blue Shield Association, said the insurer continues to believe AHIP membership is “valuable” and has renewed for 2016.