A shifting health care market, and the possible end of a contract with the University of Pittsburgh Medical Center, will dictate whether more layoffs take place at health insurer Highmark, which is one of the Harrisburg region’s largest employers.
Pittsburgh-based Highmark has laid off about 520 people in the past eight months. The layoffs are divided about evenly between health insurance positions and jobs at West Penn Allegheny Health System, which Highmark bought last year.
In early March, Highmark laid off about 100 people, including 40 in Cumberland County, where Highmark has a major site in East Pennsboro Township. In February, Highmark laid off 132 workers in information technology and sales, including about 43 in Cumberland County.
“The bottom line is that health care is changing rapidly and we are trying to transform health care in our markets and, basically, the workforce needs to be aligned with our strategies,” said spokesman Leilyn Perri, who said Highmark wouldn’t go into more detail about the layoffs.
Highmark, when counting West Penn Allegheny, has about 37,000 employees, including about 4,000 in the Harrisburg area. About 20,000 are on the health insurance side of the business.
It has about 5.2 million health insurance members, including 1.1 million in central Pennsylvania.
Perri said Highmark is financially strong and has a strong customer retention rate of about 95 percent. He also said Highmark has been successful in attracting people to plans itoffers on the federally-run exchange that’s part of the Affordable Care Act, or Obamacare.
He said factors such as the number of people covered by Highmark health insurance dictate the size of Highmark’s workforce.
The most urgent threat to membership will rise later this year as a result of the possible end of Highmark’s contract with the vast UPMC health system, which is the dominant provider of hospital and doctor care in western Pennsylvania.
The two entities have been unable to agree on a contract that would keep the UPMC providers part of Highmark’s network. The contract is set to expire at the end of the year. Highmark wants to continue the contact, but UPMC has said it will go forward without Highmark.
UPMC has said Highmark’s purchase of West Penn Allegheny makes Highmark a competitor with an incentive to steer members to West Penn Allegheny hospitals and doctors. Highmark has said it bought financially-struggling West Penn Allegheny to preserve health care market competition and to ensure customers have an alternative to UPMC.
UPMC has its own health insurance plan, although it covers far fewer people than does Highmark.
If the contact expires, people covered by Highmark could still use UPMC doctors and providers, but they would have to pay higher out-of-network prices.
So if the split occurs, Highmark will be at a disadvantage in retaining people and employer groups, since some will prefer coverage that grants network access to all local hospitals and providers.
With that in mind, major national health insurers such as Aetna and Cigna have positioned themselves to provide an alternative to Highmark.
Several western Pennsylvania legislators have introduced bills that would require Highmark and UPMC to have a contract.
At many businesses, employees chose their health coverage in the summer and fall, meaning it won’t be long before Highmark customers have to choose between Highmark or another insurer.