WellCare Health Plans Inc. CEO Kenneth Burdick expressed confidence in the prospects of the company's government-sponsored health programs business following the announcement of the company's pending acquisition of Meridian Health Plan of Michigan Inc., Meridian Health Plan of Illinois Inc. and pharmacy benefit manager MeridianRx.
A big part of Meridian's business comes from Medicaid and Medicare Advantage, but Burdick did not discount the potential of the company's individual exchange business. The CEO said Meridian's individual exchange capabilities are "a little more advanced" and "a little bit more mature" compared with those that WellCare built out back in 2015.
WellCare had cautiously participated in the Affordable Care Act marketplaces in Kentucky and New York but ultimately decided to withdraw from those markets. The Meridian deal gives WellCare optionality should exchanges become more stable, the CEO said.
"We do like the optionality that it provides us in the event that the exchanges stabilizes," Burdick said. "I'm not predicting whether they will or not, but I like having that in our toolkit if we do see there's a long-run sustainable path for profitable growth in the exchange business."
Burdick said the deal will boost WellCare's Medicaid business, with membership expected to grow nearly 40%. The CEO said the deal will help WellCare lead in Medicaid membership in six states.
"We see tremendous future opportunity in Medicaid growth not necessarily by virtue of the members but by virtue of the types of members that will be rolled into managed Medicaid plans," Burdick said.
He said the deal will also add 27,000 Medicare Advantage and integrated dual-eligible members to WellCare and deepen the company's Medicare Advantage presence in Illinois. Acquiring Meridian will expand WellCare's geographic footprint to 21 states with the addition of Michigan, Indiana and Ohio, according to the CEO.
