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Michigan Health Market Review 2023 Part 1

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    Report

  • November 2023
  • Region: United States
  • Allan Baumgarten
  • ID: 5396893

HMO Enrollment Passes Four Million

Driven by growth in Medicaid and Medicare plans, enrollment in Michigan HMOs grew by 4.1% in 2022, surpassing the four-million mark for the first time ever. After a sharp drop in profitability in 2021, net income increased in 2022 and again in the first half of 2023.

This report examines financial measures, enrollment trends and competitive strategies for health insurers and hospital systems in Michigan and five other states. 

Key findings in the new report:

  • Net income for Michigan HMOs grew from $44.1 million in 2021 to $542 million, or 2.3% of revenues of $23.352 billion in 2022. In the first half of 2023, HMOs improved their margins to 3.7% of revenues. In 2022, HMOs had net income of $542 million, almost as much as their record setting profits of $551.2 million in 2020. Five HMO companies - Health Alliance Plan, McLaren Health Plans, Meridian Health (a Centene company), Priority Health and UnitedHealthcare Community Plan - had margins above 3%. Blue Cross Blue Shield Mutual of Michigan, the largest insurer in the state, reported a loss of $269.3 million in 2022, but had net income of $41.2 million in the first half of 2023.
  • Some of the most profitable HMOs are those that contract with the state to serve Medicaid enrollees. Profits for Medicaid HMOs are strong, although they fell from $279.8 million in 2021 to $230.3 million in 2022, and their margins fell from 3.4% to 2.8%. In the last three years, Medicaid HMO plans had combined underwriting income of $692 million.
  • Medicaid enrollment has grown by 275,000 lives since the end of 2020, reaching 2.3 million in June 2023. Michigan has started the procurement process to select Medicaid HMO plans for new contracts starting in the fall of 2024. These contracts are a huge business opportunity; they are worth more than $8 billion a year, and the competition to get or keep and expand contracts will be fierce. Michigan sets high expectations for those health plans, requiring them to take steps to improve the health of their enrollees.
  • Medicare Advantage plans were very profitable in 2020 but reported large losses in both 2021 and 2022. Enrollment has grown by 15% in the last two years, and about 58% of the state’s 2.18 million Medicare beneficiaries are now in a Medicare Advantage plan.
  • Enrollment in Michigan HMOs has grown by 703,000 (20.6%) since the beginning of the COVID-19 pandemic in 2020, with Medicaid and Medicare Advantage plans enjoying the largest gains. Meridian Health Plan, now owned by Centene, has the largest Medicaid plan, and Priority Health is the largest Medicare Advantage HMO. Blue Cross Blue Shield Mutual has the largest Medicare PPO enrollment in the state.
  • Some growth in Medicaid enrollment occurred because states could not require reverification of eligibility during the public health emergency, which ended in May 2023. As of August 2023, the state had completed reverifications of eligibility for about one-third of Medicaid recipients, and about 47,000 were found to be ineligible and about 224,000 others lost benefits, mostly because they failed to complete or return the information requested by the state.

Table of Contents

1. Introduction

2. Market Structure

  • Health Plans
  • Provider Systems

3. Trend Review

  • Individual Plans and the Marketplace
  • Medicaid Managed Care
  • Medicare Plans
  • Health Plan Revenues and Income
  • Financial Results by Line of Business
  • Provider Payments
  • Administrative Expenses
  • Health Plan Capital

4. A Look Ahead

Companies Mentioned

  • Blue Cross Blue Shield
  • Health Alliance
  • McLaren Health
  • Meridian Health (A Centene Company)
  • Priority Health
  • UnitedHealthcare

Methodology

The reports analyzing state health care markets are intended to be a resource to health care organizations facing a full range of challenges but also seeking to identify and benefit from opportunities that present themselves. 

This report is presented in three main sections. The first part, Market Structure, describes the major health insurers and hospital systems in the state, showing recent entrants and the high-level of consolidation that has occurred in both the health plan and provider markets. Market Trends, the next section, presents our analysis of enrollment trends and financial results for the health insurers. The last section contains our analysis of financial and inpatient utilization data on the hospitals in the state.

The analysis of health plan companies is based on their annual and quarterly statements filed with the Department of Insurance, including forms prescribed by the National Association of Insurance Commissioners and supplemental reports required by the state. The publisher also uses Medicaid data from the Department of State Health Services and Medicare health plan and hospital data from the Centers for Medicare and Medicaid Services. The publisher has that data together with insights that they have gained in interviews with dozens of leaders in health care organizations in the state.

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