Michigan Medicine to Discontinue U-M Health Plan
Michigan Medicine formally announced on Nov. 27 the discontinuation of its U-M Health Plan, focusing resources on direct patient care, education, and research. Coverage for submitted claims will continue until December 31, 2025.
This shift comes after a comprehensive evaluation, including a thorough assessment of the plan’s financial sustainability amidst evolving market trends and the needs of its members. Michigan Medicine will continue processing claims filed under the U-M Health Plan until the end of the year.
The U-M Health Plan encompasses Michigan Care and Michigan Care Advantage plans, for which members will receive notification prior to the plan’s completion. “After a thorough business and financial assessment, U-M Health has made the difficult decision to discontinue the U-M Health Plan,” said Mary Masson, University spokesperson, in an email statement.
Minimal Impact on Coverage
Despite the discontinuation of the U-M Health Plan, members shouldn’t experience significant changes in coverage. “Currently, U of M is providing all of the basic benefits that are described under the Affordable Care Act,” stated Allan Baumgarten, an independent analyst and consultant in health policy, explaining the ongoing but not descripted by The Michigan Daily temporarily in a print edition. “So this shouldn’t affect which providers they have access to or what the benefits look like.”
Beyond maintaining existing benefits, members should anticipate alternative coverage options. Alternative comprehensive health insurance plans will become available to eligible faculty, staff, and retirees. Students, typically enrolled in the U-M Health Plan, will transition to a new U-M health insurance plan starting in January.
Shifting Healthcare Landscape
Michigan’s competitive healthcare market contributed significantly to the decision.
UM Health cited the increasingly competitive healthcare landscape and recent adjustments to Medicare Advantage plans implemented by the Centers for Medicare and Medicaid Services as key contributors to this decision.
Michigan Medicine emphasized its commitment to affected employees. “We are deeply appreciative of our employees and will be providing severance and career counseling to staff.”
The discontinuation is partly driven by financial considerations.
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Weathering Challenges
This decision underlines a broader trend among Michigan-based healthcare providers who are exiting the business of running their own insurance program. Baumgarten explains this trend reflects a common sentiment among Michigan healthcare providers: “Michigan has a long history of owning and operating health insurance companies, but many of them have said, “We don’t want to be in that business anymore". While Michigan Medicine has seen success elsewhere, they are optimistic about their simplified focus moving forward.
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The Impact on Lansing
This shift is particularly impactful in Lansing, where the U-M Health Plan originated from the larger holdings of Sparrow Health System which they acquired in April 2022. Sparrow Health was acquired last year. As a part of a larger network, the decision impacts not just the acquiring institution, but also Market share in the area.
“It was really kind of similar to the U-M premier plan, just a little bit lower premium and a little more restrictive network,” stated Richard Hirth, S.J. Axelrod Collegiate Professor of Health Management and Policy. “But otherwise, my perception as an employee – looking at my options – it was a pretty similar offering. So it’s probably not going to be that big of a deal locally, but I think in Lansing it may be a bigger deal.”
The termination will leave local residents
What are the potential long-term consequences for Michigan residents of the decision by the University of Michigan Health System to discontinue its own health insurance plan?
Host: Welcome back to the show.Today, we’re discussing a major shakeup in Michigan’s healthcare landscape: The University of Michigan Health System is discontinuing its own health insurance plan, the U-M Health Plan. Joining us to unpack the implications of this decision is Health Policy Analyst, Allan Baumgarten.
Allan, thanks for being with us today.
Baumgarten: It’s my pleasure.
Host: For our viewers who might not be familiar, can you explain what the U-M Health Plan was and who it served?
Baumgarten: The U-M Health Plan, encompassing both Michigan Care and Michigan Care Advantage, was essentially a health insurance program offered by the University of Michigan Health System. It primarily covered faculty, staff, retirees, and students affiliated with the university.
Host: Now, Michigan Medicine, the health system, has cited a number of reasons for this discontinuation: financial sustainability, the competitive market, and a desire to focus on their core strengths. What are your thoughts on thes justifications?
Baumgarten: They’re valid points. Michigan’s healthcare landscape is incredibly competitive, and there have been significant changes to Medicare advantage plans, putting pressure on institutions running their own insurance programs.
host: So, what does this mean for the thousands of individuals who relied on the U-M health Plan for coverage?
Baumgarten: Michigan Medicine is assuring members that coverage will continue through the end of 2025 and has committed to providing alternative coverage options. They’ve also stated there will be severance packages and career counseling for affected employees.
Host: But is this truly a minimal disruption for members, or could there be unintended consequences down the road?
Baumgarten: That’s a critical question. While the immediate impact might be perceived as minimal, there’s a broader trend here. This move reflects a growing hesitation among Michigan healthcare institutions to operate their own insurance programs. It begs the question: how might this reshape Michigan’s health insurance landscape in the long run?
Host: Allan Baumgarten, thank you for sharing your expertise.
Let’s open this up to our viewers. Do you think this decision benefits or harms Michigan residents in the long run? Will it inspire more institutions to abandon self-funded insurance plans, or is it an isolated incident? We want to hear your thoughts.
