In A First, All Three KanCare Insurance Companies Turn A Profit in 2016

Mar 2, 2017

All three of the private insurance companies that manage the Kansas Medicaid program made a profit on it in 2016 — the first year that has occurred.

UnitedHealthcare was by far the most financially successful of the three, with $30.2 million in profits. Sunflower State Health Plan, a subsidiary of Centene, had a $5.5 million profit and Amerigroup made about $3.4 million.

The three companies lost millions in 2013 and 2014, the first two years of KanCare.

State officials announced the 2016 results at last week’s meeting of the Robert G. (Bob) Bethell Joint Committee on Home and Community Based Services and KanCare Oversight.

Mike Randol, director of the Division of Health Care Finance at the Kansas Department of Health and Environment, told the committee members that financial losses are typical in the first years of a managed care program. 

For Sunflower, 2016 was the first year it made a profit on KanCare operations. It lost about $12 million in 2015.

The company declined to offer specific information about why its fortunes had improved, but Chris Coffey, Sunflower’s president and CEO, said he was pleased with the results, which he said would allow more investments in community health initiatives.

After losing millions in 2013 and 2014, the three insurance companies that operate Kansas Medicaid all turned a profit in 2016.

Amerigroup’s profits were down substantially in 2016 from $24.2 million the previous year, a drop of about $21 million. A spokeswoman declined to comment on the results.

UnitedHealthcare showed little change, with profits increasing from $29.4 million in 2015 to $30.2 million in 2016.

Medicaid is a state-federal partnership in which the federal government pays about 60 percent of the costs. The $3 billion KanCare program provides health care coverage for about 425,000 people — most of them low-income children, pregnant women and people with disabilities.

Rep. Jim Ward, a Democrat from Wichita and a longtime KanCare critic, questioned whether the profits resulted from denials of coverage or services. Some members of the public who spoke at the committee meeting said they were denied services or inexplicably lost coverage, though others praised employees of the insurance companies who helped them navigate the health care system.

The government provides KanCare coverage for people with disabilities because insurance companies couldn’t do so and still make a profit, Ward said.

“Medicaid wouldn’t exist if you could provide these services through the private sector,” he said.

Some legislators not ideologically opposed to privatization also wanted more information, however. Rep. Dan Hawkins, a Republican from Wichita, asked KDHE officials to provide more data about the companies’ profit margins but didn’t indicate what he thought was an appropriate amount.

“I would certainly think the MCOs making a profit is healthy,” he said.

The state’s waiver for KanCare ends in December. Federal officials denied a request to extend the program as it is, so Kansas will have to come up with a renewal plan in the next few months. Federal regulators pointed to problems with KanCare, but state officials attributed them to political games by the outgoing administration of former President Barack Obama.

Meg Wingerter is a reporter for KCUR’s Kansas News Service, a collaboration of KCUR, Kansas Public Radio and KMUW covering health, education and politics in Kansas. You can reach her on Twitter @MegWingerter. Kansas News Service stories and photos may be republished at no cost with proper attribution and a link back to kcur.org.