• SELECT SITE CURRENCY
Select a currency for use throughout the site
Michigan Health Market Review 2012: Part One
Allan Baumgarten, July 2012
Michigan Health Market Review 2012 Finds: Health Plan Companies Enjoy Strong Profitability and Prospects for Growth; New Wave of Consolidations Changes Market Dynamic
(Detroit/Ann Arbor) HMOs in Michigan posted their highest net income ever in 2011, added members and have strong prospects for growth in all major lines of business.
These findings and others are reported in Part One of Michigan Health Market Review 2012. This is the 16th annual Michigan market study published by Allan Baumgarten, an independent analyst and consultant based in Minnesota.
In his annual analysis of financial metrics and enrollment trends for Michigan's health insurance companies, Baumgarten found:
Michigan HMOs posted net income above $300 million for the first time. In 2011, Michigan HMOs had net income of $303 million, or an average margin of 2.6% of operating revenues. Blue Care Network was the most profitable, with net income of $163.7 million, or 6.2% of revenues.
Michigan HMOs made money on all lines of business: employer groups, Medicare and Medicaid. Group plans were especially profitable this year, but HMOs also had average margins of 5.7% on their Medicare plans and 2% on Medicaid.
Medicaid enrollment is likely to surpass employer group membership in the next year. State leaders need to decide whether to participate in the expansion of Medicaid eligibility under the Affordable Care Act. In Michigan it would bring coverage to an estimated 400,000 persons between 2014 and 2019, most of who would likely enter HMOs. And if the state proceeds with its plan to enroll use seniors and disabled Medicaid recipients in managed care, that would add 200,000 or more enrollees. To position themselves for this expected growth, Michigan HMOs bought three Medicaid plans in the past year.
Growth in small group and individual plans for HMOs is also expected. Subsidized coverage through a health insurance exchange could bring in an estimated 360,000 new enrollees, depending on which companies elect to market to them.
Enrollment in Medicare HMOs, which has been relatively low here, has surged in the past three years and will likely pass 200,000 this year. Future growth is likely to be strong, as baby boomers retire and examine their Medicare options.
Employer premiums grew faster than medical expenses in 2011, leading to strong profitability. On average, HMOs collected $339 per member per month from their employer customers, an increase of 5.2% from 2010. Their medical expenses increased by 2.5% to $298.