- Language: English
- 600 Pages
- Published: December 2013
- Region: Global
Michigan Health Market Review 2013 Reports
- Published: July 2013
- Region: United States
- Allan Baumgarten
Health Insurers Repeat Strong Profitability; Face Uncertainty as Well as Good Prospects for Growth
(Detroit/Ann Arbor) HMOs in Michigan again reported strong profits for 2012, but face declining margins on their Medicaid business and uncertainty in prospects for future growth.
These findings and others are reported in Part One of Allan Baumgarten's Michigan Health Market Review 2013. This is the 17th year that Baumgarten has analyzed health care payer and provider markets in Michigan. He is an independent researcher and consultant based in Minnesota. A Part Two report, to be released later this year, will analyze system building by providers, hospital revenues, profitability and utilization using 2012 data, and update enrollment and financial measures for health insurers. Baumgarten also publishes market analyses in Colorado, Florida, Illinois, Minnesota, Ohio, Texas and Wisconsin, and is co-author of an insurance market analysis for New York.
Looking at profitability, other financial metrics and enrollment trends for Michigan's health insurance companies, Baumgarten found:
- For the second consecutive year, Michigan HMOs posted net income above $300 million. Michigan HMOs had net income of $311 million in 2012, or an average margin of 2.6% of operating revenues. Blue Care Network (including its Medicaid HMO) was the most profitable, reporting net income of $167.4 million, or 6.2% of revenues. Most of that came from its employer group plans.
- Michigan HMOs made money on all major lines of business, but margins dropped on Medicaid plans. Employer plans were especially profitable this year, but average underwriting margins on Medicaid plans dropped from 2.4% in 2010 to 2% in 2011 and 1.4% in 2012. Michigan HMOs added $221 million to their surplus in 2012 and now have $1.2 billion more than the minimum required.
- Medicaid enrollment continues to grow and surpassed employer group membership in 2012. Expanding Medicaid eligibility under the Affordable Care Act would like bring coverage to up to 400,000 Michigan residents between 2014 and 2019, but the legislature has not approved Governor Snyder?s expansion plan. Another 200,000 dual eligibles could also enter HMOs or other kinds of managed care if the state moves ahead with plans to enroll seniors and disabled Medicaid recipients. Anticipating growth opportunities, four Medicaid HMOs in Michigan were acquired in the past two years.
- While enrollment in HMO group plans has declined steadily for the past 10 years, that could turn around in 2014. This spring, 14 HMOs and insurers announced that they would sell plans in the new insurance exchange. As many as 14 companies will sell individual or small group coverage, and that could give a boost to HMOs.
- Enrollment in Medicare HMOs, which has been relatively low here, has surged in the past three years up to almost 200,000 seniors. Priority Health?s Medicare plans have grown rapidly and are the largest and most profitable.
- Employer premiums again grew faster than medical expenses, adding to the profitability of those plans. On average, HMOs collected $356 per member per month from their employer customers, an increase of 5.1% over 2011. But medical expenses increased by only 2.9%. SHOW LESS READ MORE >