As the economy started to recover and health reform measures began to be implemented in Q1 2011, health plans benefited with increased enrollment. According to industry analysts Mark Farrah Associates, “The Commercial sector saw a net gain of 1.6 million members between December 2010 and March 2011. In comparison, the Commercial sector gained approximately 388,000 between December 2009 and March 2010.” The increase contributed to an overall membership gain of 1.1% for the top seven health plans/insurers.
Across all seven health plans, which account for 41% of membership in the country, the news was generally positive especially on the profit side. Profits were up almost across the board, with United HealthGroup enjoying a 7.95% margin and Kaiser, Wellpoint, and Aetna all seeing net profits in excess of six percent. The good news continued in the second quarter; Kaiser saw a sixty-plus percent jump in profits in Q2; Cigna and Humana each had profit increases of more than thirty percent.
The PPACA’s requirement that health plans provide coverage for dependents up to age 26 added about 280,000 members for Wellpoint and less than 100k for Aetna over the year ended Marh 2011.
Medicare and Medicaid enrollment also saw gains; Medicaid’s increase was a bit more than commercial’s at 2.3%. In contrast, Medicaid grew by 13.6% during the recession, which economists consider ran from December 2007 to December 2009.
What does this all mean?
PPACA has already contributed to increased revenues for health plans. Margins are solid across the board and look to be growing.
Membership is also on the upswing, driven partially by governmental programs but primarily by substantial increases on the commercial side.
Overall, it’s a good time to be in the health insurance business. That said, there’s a very, very different world coming and health plans will need all the free cash they can accumulate to prepare for health reform’s dramatic changes to their business models.
Aug
15
