Mark Farrah and Associates’ latest report indicates health plans enjoyed a nice bump in enrollment in Q1 2010 from the previous quarter, with the entire increase coming from ASO (large, administrative-services only plans that are sold to larger employers) business.
In fact, risk-based insurance plans (more commonly purchased by smaller employers) saw a significant decline in enrollment in Q1 of 0.6%, or 890,000 members. According to MFA’s report, ” WellPoint added 565,000 new ASO members in 1Q10, but lost 400,000 fully insured members. UnitedHealth saw gains in both segments.”
What’s happening here?
It’s no surprise that the economy has hammered employers small and large, but smaller employers are more ‘flexible’ when it comes to benefit plans. They can choose to drop or add coverage much more quickly and with fewer repercussions than big firms. In fact, large employers almost never drop their coverage, while the percentage of smaller employers offering health insurance has been shrinking steadily for years.
The actual decrease in employer coverage (at least as it appears in MFA’s highlights) is masked somewhat by increases in Medicare Advantage PFFS plans, which grew significantly for CIGNA; there’s much of the Medicare PFFS story still to be written as Coventry completes its exit and other health plans work thru their respective strategies.
Year over year, Medicare Advantage plans have seen significant growth, with membership up by 600,000 members, despite a drop in the number of insurers offering MA options.
Meanwhile, medical trend numbers are looking better, contributing significantly to the jump in profits enjoyed by most of the major health plans. Contributing to the increase in 2009 was a drop in pharmacy expense, which was somewhat offset by a 1.2 point increase in the percentage of medical expense paid to hospitals.
Ok, so net it out.
Health plans are continuing to restructure their books of business, winnowing out the unprofitable or potentially-unprofitable members, states, and coverage types. The nice bump in profits isn’t surprising, but the hard work is yet to begin.
That hard work is changing from a risk selection to care and cost management business.
Aug
12
However this whole thing pans out, I hope to see those who have created a high risk rate class for themselves be held financially responsible for theirs actions. I hate seeing gluttons weigh down group plans costing those who have taken their health more seriously.
It’s your life and you should live it how you like, but I would like to see better accountablility for people’s actions.
I wouldn’t discount the number of small groups going self funded. We have groups as small as 15 dropping their Anthem or Humana $5000 HSAs and buying $5000 specific deductibles. If the stop-loss market for groups sans experience wasn’t so hard you would have seen 3-4 times the loses in fully insured.
Groups aren’t dropping coverage they are dropping the old way of delivering it and the old carriers gouging them.