Is Harvard Pilgrim the Canary in the Coal Mine?

Massachusetts was the first state in the nation to institute a health reform plan aimed at achieving a fully-insured population.  Now, one of the state’s leading insurers could be starting a new trend being driven by federal policy, and it’s one that won’t be warmly welcomed by consumers.

Harvard Pilgrim Health Care has sent alerts to customers that it will be ending its Medicare Advantage coverage program by the end of the year.  This is an enhanced Medicare plan currently enjoyed by approximately 22,000 customers in Massachusetts, New Hampshire and Maine.

The reason behind Harvard Pilgrim’s decision is clear.  The new health reform law uses cuts in Medicare Advantage funding to help pay for other aspects of reform.  Between reduced revenues and new regulations requiring health plans to construct physician networks  (previously, Harvard Pilgrim allowed their customers to have their choice of physicians), the insurers concluded that its Medicare Advantage program was no longer viable.

According to Harvard Pilgrim’s vice president of customer service, speaking to the Boston Globe, “We became concerned by the longterm viability of Medicare Advantage programs in general.  We know that cuts in Medicare are being used to fund national health reform.  And we also had concerns about our ability to build a network of health care providers that would meet the needs of our seniors.”

Of course, Medicare Advantage has been the object of an ideological struggle in health policy for years, between those who resent the presence of private health plans in the Medicare program and those who believe Medicare beneficiaries and the program itself gain from an injection of choice and competition.

But, the Harvard Pilgrim customers who are going to lose their Medicare Advantage program are less concerned with political struggles than they are with their options for future health coverage.  The larger question is whether this particular Massachusetts development is going to be replicated in other locales throughout the country.