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How much are you worth to an HMO?

Medicare health plan members are worth more than any other category of enrollee in a merger or acquisition deal, Wall Street analysts say. That may explain why beneficiaries' mailboxes are clogged with ads.

In fact, they’re worth four times as much as members of employer-based plans and five times as much as members of Medicaid plans, according to a report from Goldman Sachs researchers Matthew Borsch and Samuel Wass.

By their calculations, Medicare Advantage (HMO or similar managed-care plan) enrollees have a “value per member" of $6,000 in a merger or acquisition.

That compares with $1,500 for commercial plans – the ones that employers offer but in which the insurer takes the financial risks – and $1,200 per member for Medicaid plans.

The researchers prepared the analysis in the wake of Monday's announcement that Cigna will buy HealthSpring, a holding company that includes Medicare plans in 11 states and Washington, D.C. that encompass 340,000 members. Among the HealthSpring plans are two in Florida, in Miami and Pensacola.

The $3.8-billion sale is expected to take place in the first half of 2012.

Because of the announcement, the Wall Street analysts raised their value per member to $6,000 from $4,000 for members of Medicare Advantage plans and to $700 from $600 for those in drug-only plans under Part D. Enrollment for both types of plans for 2012 is currently under way through Dec. 7.

The analysts also raised the estimated per-member value for Medicaid HMO enrollees to $1,200 from $1,000, saying that the Cigna-HealthSpring deal “makes tangible” insurers’ increasing interest in public-sector business.

In a report earlier this year, the Goldman Sachs team had forecast this interest because of the government plans’ profitability and a calmer, more predictable regulatory environment after the turbulence of the health-reform fights.

Other analysts have also noted the mega-insurers' growing desire to acquire Medicare customers. As Carl McDonald of CitiGroup wrote today in a note about Universal American: "It’s hard to overstate how much the attitude of the largest plans ...has changed toward the Medicare business in just the last six months."

United Health Group was first to discover the pot of gold Medicare plans offered and bought PacifiCare in 2005, as McDonald notes, but now WellPoint, Cigna and Aetna are waking up. Aetna needs to buy a Medicare plan soon or be left behind "on one of the few areas of growth," he wrote.

--Health News Florida is a non-profit publication dedicated to public-service journalism. Questions or Letters to the Editor can be directed to Carol Gentry at 727-410-3266 or by e-mail.

Carol Gentry, founder and special correspondent of Health News Florida, has four decades of experience covering health finance and policy, with an emphasis on consumer education and protection.