The Healthy Michigan Medicaid expansion has given coverage to 600,000 Michigan residents and created a large and profitable business opportunity for health insurers. These findings and others are reported in Part One of Michigan Health Market Review 2016, released here today. This is the 20th edition of the report that has been published analyzing the health care payer and provider markets in Michigan.
The Part Two report, to be released later this year, will analyze the revenues, profitability and inpatient utilization of the state’s hospital systems based on 2015 data, and compare their strategies under health reform.
Key findings in this new report include:
- After increasing by 21% in 2014, enrollment in Medicaid HMOs grew by 8.5% in 2015 and another 3.4% in the first quarter of 2016. Meridian Health is the largest Medicaid HMO, with 468,000 enrollees, followed by Molina Healthcare. The state has launched demonstration projects in several key counties to enroll aged and disabled Medicaid recipients in managed care, another source of future growth.
- Medicaid plans had underwriting income of $298 million in 2015 and a 3.9% margin. That compares to underwriting income of $163.1 million in 2014 and a 2.8% margin. HMO Medicaid grew by 32% in 2015. HAP Midwest Health Plan and Molina Healthcare were the most profitable of the Medicaid HMOs, but HAP Midwest lost most of its state contracts and revenues at the beginning of 2016.
- The strong profitability is largely due to payments to the health plans growing faster in the past two years than the underlying medical expenses. Anticipating that the new enrollees would be higher utilizers of care, the state increased payment rates above traditional Medicaid. While average payments to Medicaid plans increased by 31.9% from 2013 to 2015, medical expenses grew by only 19.8%.
- The state's largest insurer, Blue Cross Blue Shield Mutual, reported a loss of $344.3 million in 2015. Contributing factors included far lower profits in commercial plans, losses on Medicare Supplement plans and Medicare Advantage plans, payments to the Michigan Health Endowment Fund, and reserving $315 million to pay settlements and judgments arising from lawsuits against the company.
- Enrollment in individual insurance plans increased by 40,000 during the open enrollment period for the 2016 benefit year. The growth was in HMOs like Priority Health and Blue Care Network, and some PPO plans lost enrollment. In 2015 individual plans generally broke even, but companies are requesting average premium increases of 17.2% for 2017. The Consumers Mutual co-operative went out of business in 2015 and Humana and UnitedHealthcare will stop selling on the Healthcare.gov exchange.
- The health insurance market has become more consolidated, as two HMOs went out of business. HealthPlus sold its Medicaid business to Molina Healthcare and its commercial and Medicare plans to Health Alliance Plan. Sparrow PHP closed after losing its state Medicaid contract. SHOW LESS READ MORE >
2. Market Structure
3. Health Plans
4. Provider Systems
5. Trend Review
6. Health Plan Enrollment
7. Medicaid Managed Care
8. Medicare Plans
9. Net Income
10. Financial Results by Line of Business
11. Provider Payments
12. Health Plan Capital
13. A Look Ahead