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Michigan Health Market Review 2011: Part One
Allan Baumgarten, Aug 2011
HMOs in Michigan increased their enrollment in all their lines of business in 2010 and posted higher profits. And the outlook for further growth is very positive under national health reform.
These and other findings are reported in Part One of Michigan Health Market Review 2011. This is the 15th annual Michigan market study published by Allan Baumgarten, an independent analyst and consultant based in Minnesota. Later this year, the Part Two report will analyze hospital profitability and utilization for 2010 and compare HMOs on utilization and quality of care measures. Baumgarten has also published annual market reports in Arizona, California, Colorado, Florida, Illinois, Kentucky, Minnesota, New York, Ohio, Texas and Wisconsin.
Based on his analysis of the finances and enrollment trends of Michigan's health insurance companies, he found:
Enrollment in Michigan HMOs increased by 4.4% in 2010 to 2.7 million. Medicaid HMOs added 65,000 new members and 47,000 seniors joined HMO Medicare plans. Priority Health and two Medicaid HMOs, Health Plan of Michigan and UnitedHealthcare Great Lakes Health Plan, enjoyed the largest growth. Enrollment in employer group plans grew a little in 2010, though that comes after 10 years of declining group membership. Employers have left HMOs for plans that are less comprehensive and less expensive or have dropped coverage altogether.
In 2010 Michigan HMOs posted average profit margins of 2.1%. They had net income of $219 million, including $57.5 million in investment income. Compared to 2009, they made more on operations and less on investments. Blue Care Network posted the highest profits, at $104.2 million, or 4.4% of revenues.
Medicaid plans were strongly profitable, with HMOs posting net income of $97.4 million. On average, Medicaid HMOs spent 82.7% of each premium dollar for medical expenses in 2010. Medicaid HMOs are likely to gain 300,000 or more new enrollees as expanded eligibility under health reform is implemented.
Commercial premium revenues increased by an average of 4.1% in 2010, to $322 per member per month. That was higher than in 2009 (2.9%) but less than 2007 (8%). In the last five years, employers have seen their average premiums increase by about $60 per member per month. On average, medical expenses for employer groups increased by 4.0%.
Enrollment in Medicare Advantage HMOs increased again, though it is still less than 10% of Michigan seniors. About 75,000 seniors left Medicare private fee-for-service plans in 2010, with many enrolling in Medicare HMO and PPO plans.
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