SCAN Group and CareOregon, two significant players in the health insurance landscape, have officially called off their planned merger, a little over a year after initially announcing their intent. This decision puts an end to the formation of HealthRight Group, a proposed $6.8 billion health plan designed to serve both Medicaid and Medicare Advantage populations. The initial announcement in December 2022 suggested a smooth closing in 2023, but the deal encountered significant headwinds, particularly during the public comment phase and scrutiny from Oregon’s Medicaid Advisory Committee. This article delves into the reasons behind the cancellation of the Care Oregon Scan merger and what it signifies for the healthcare industry.
The merger aimed to unite SCAN Health Plan, known for its Medicare Advantage offerings in Arizona, California, and Texas, with CareOregon, a provider of Medicaid and Medicare Advantage plans to around 500,000 Oregon residents. The combined entity was projected to cover nearly 800,000 members, creating a substantial force in the government-sponsored health insurance sector. However, the proposed care oregon scan deal quickly attracted attention and criticism from various stakeholders.
Oregon’s Medicaid Advisory Committee played a crucial role in derailing the merger. The committee voiced “serious concerns,” highlighting SCAN’s perceived lack of experience in addressing health inequities and the potential outflow of taxpayer money from Oregon. These concerns resonated with several Oregon politicians, including former Governor John Kitzhaber, former Oregon Health Authority Director Patrick Allen, and State Representative Travis Nelson, all of whom publicly opposed the merger. The rising political pressure and regulatory questions surrounding the care oregon scan integration ultimately proved insurmountable.
In a joint statement, SCAN Group and CareOregon acknowledged the withdrawal of their merger application. “Our intent in coming together was to support Oregon’s healthcare system and the people that CareOregon serves,” the statement read. “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 mutual decision underscores the significant challenges and public scrutiny that complex healthcare mergers can face, even when aimed at expanding services and improving care.
The backdrop to this scrapped merger is the increasing prominence of government-sponsored insurance plans, particularly Medicare Advantage. Medicare Advantage plans have witnessed a surge in popularity, now covering over half of the Medicare-eligible population in 2023. Enrollees generally report satisfaction with their MA plans and often experience better health outcomes compared to traditional Medicare beneficiaries. Despite this growth and positive reception, recent financial reports indicate diminishing returns for insurers in the MA market. A Moody’s report revealed a 2% decrease in MA earnings in 2022 compared to 2019, despite membership growth. Proposed CMS regulations for 2025 suggest potential further reductions in payment rates, adding to the financial pressures on insurers in this sector. The failed care oregon scan merger highlights the complexities and challenges even in a growing market like Medicare Advantage, especially when regulatory and public concerns arise.
