The proposed merger between SCAN Group and CareOregon, which aimed to create a significant healthcare entity named HealthRight Group, has been abandoned. This decision comes just over a year after the initial announcement of the $6.8 billion deal, as confirmed by both insurers on Thursday to Healthcare Dive. The merger, intended to serve a substantial population across Medicaid and Medicare Advantage plans, faced increasing scrutiny and regulatory hurdles in Oregon.
The planned union of SCAN Health Plan, known for its Medicare Advantage offerings in Arizona, California, and Texas, and CareOregon, a provider of Medicaid and Medicare Advantage plans to 500,000 Oregon residents, was projected to reach nearly 800,000 members. However, the deal encountered significant pushback. Oregon’s Medicaid Advisory Committee voiced serious reservations, ultimately recommending disapproval to the Oregon Health Authority in December. Public comments also reflected criticism, adding to the mounting pressure against the merger of SCAN and CareOregon. Key concerns raised included SCAN’s perceived lack of experience in addressing health inequities and anxieties surrounding taxpayer funds potentially leaving the state.
Political opposition further complicated the merger process. Prominent figures such as former Oregon Governor John Kitzhaber, former Oregon Health Authority Director Patrick Allen, and current state Representative Travis Nelson publicly opposed the deal. Their collective voices amplified the concerns raised by the Medicaid Advisory Committee and public, making the path to regulatory approval increasingly challenging for the SCAN CareOregon merger.
Citing these persistent questions and challenges, SCAN Group and CareOregon jointly decided to withdraw their merger application with Oregon regulatory agencies, effectively terminating their affiliation agreement. In a joint statement to Healthcare Dive, the organizations stated, “Our intent in coming together was to support Oregon’s healthcare system and the people that CareOregon serves. 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.”
This scuttled merger sought to capitalize on the growing market of government-sponsored insurance plans, particularly Medicare Advantage. Medicare Advantage plans have witnessed a surge in enrollment, now covering over half of the Medicare-eligible population in 2023. While these plans generally enjoy high member satisfaction and have been linked to better health outcomes compared to traditional Medicare, insurers are facing evolving financial landscapes within the MA sector. Recent reports indicate a decline in Medicare Advantage profitability, and proposed CMS regulations for 2025 could further reduce payment rates, adding another layer of complexity to the healthcare insurance market.
