Memorial Hermann quits individual insurance business

Memorial Hermann Cypress Hospital is an 81-bed hospital on a 32-acre master-planned campus with state-of the-art operating rooms, an intensive care unit and neonatal intensive care unit. Memorial Hermann Cypress Hospital is an 81-bed hospital on a 32-acre master-planned campus with state-of the-art operating rooms, an intensive care unit and neonatal intensive care unit. Photo: Memorial Hermann, Photographer Photo: Memorial Hermann, Photographer Image 1 of / 1 Caption Close Memorial Hermann quits individual insurance business 1 / 1 Back to Gallery

After wading into the individual health insurance business the past three years, Memorial Hermann Health System confirmed this week it is abandoning the effort at the end of the year.

No health maintenance organization (HMO) or preferred provider organization (PPO) individual plans will be sold for 2018, officials with the health system said.

"After careful consideration, Memorial Hermann Health Plans has made the difficult decision to withdraw from the individual segments due to challenging market conditions and continued uncertainty in this segment of the health insurance industry," a spokeswoman said in an email on Thursday.

Memorial Hermann Health Plans will still offer Medicare Advantage coverage and options for businesses that offer employer-sponsored plans, officials said Thursday. Currently it provides coverage to more than 66,000 members under those plans.

The dropping of individual plans affects about 8,000 members who began receiving notification in recent days, officials said. Their policies will expire Dec. 31.

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Dan Styf, who arrived in Houston last year to shepherd the insurance expansion, acknowledged in a 2016 interview with the Chronicle that "we don't know what the future of this product looks like for us."

But Styf and Dr. Benjamin Chu, brought in last year as CEO of the entire health system, voiced enthusiasm at the time with the concept of integrating insurance into the health care mix. Both men have now left Memorial Hermann.

The withdrawal of plans comes as the individual insurance market continues to teeter amid an uncertain future. Major insurance carriers such as Humana, Aetna, Cigna and UnitedHealthcare have stopped offering individual plans in Texas through the federal exchange under the Affordable Care Act, citing losses and turmoil.

The uncertainty that has rocked the industry continues as congressional plans to repeal and replace the ACA falter, leaving insurers unable to determine who they will be insuring and how sick those policyholders will be.

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It appears that the three insurers who sold plans through the exchange in the Houston area will return for 2018, but it remains unclear what the final price of those plans will be.

While the Memorial Hermann plans were not sold on the exchange, the experiment of selling the plans directly to customers experienced an explosion in popularity then tapered off. For 2015, Memorial Hermann Health System sold 180 individual PPO plans. By the next year, that number had jumped to nearly 6,000. For 2017, the number of those plans had dropped to 1,600.