FutureFocus January 11, 2018: Five Top Payer Trends

Lisa Remington

In this week’s FutureFocus, we provide insight into the top five payers representing 43 percent of the country's total insured population. Six key findings define the five payers.  In another article, we call your attention to 2018 financial penalties for nursing homes being scaled back and what that means to the industry. With so many changes, we keep you focused on important resources you won't want to miss.

 

Lisa Remington, President, Remington Health Strategy Group

The top five payers in 2016 collectively had 125 million members, representing 43 percent of the country’s total insured population.

The five top payers: UnitedHealthCare, Anthem, Aetna, Cigna, and Humana together cover more than two-fifths of the insured population. Over the past decade, these companies’ bottom lines have become increasingly linked to Medicare and Medicaid, with the two programs accounting for 59 percent of revenues in 2016.

Key Findings

  • In 2016, Medicare and Medicaid accounted for 59 percent of combined U.S. revenue for the five insurers, more than doubling since 2010, from $92.5 billion to $213.1 billion.
  • Collectively, the five insurers’ membership grew by 23 million (23%) from 2010 to 2016, with four of the five growing by at least 20 percent. This was more than double the increase from 2005 to 2010, the five years leading up to the ACA’s passage.
  • Medicare and Medicaid business grew faster than other segments between 2010 and 2016, doubling from 12.8 million members to 25.5 million across all five firms. By 2016, the carriers accounted for 52 percent of the Medicare Advantage market. Medicaid enrollment also doubled (7 million to 15 million).
  • Despite experiencing losses in the individual market, four of the five (with the exception of Humana) reported that pretax profits either held steady or increased from 2013 through 2016, the first three years of the ACA’s individual-market reforms.
  • Profit margins had declined between 2010 and 2013 (prior to ACA implementation) before stabilizing between 2014 and 2016 (with the exception of Humana), as individual-market losses were offset by gains in other segments.
  • The stock prices for all five insurers cumulatively increased more than 200 percent from 2011 to 2016.

"Medicaid and Medicare have been a key source of membership growth for the five insurers, with plans strategically positioning themselves to enter or expand in these markets. For example, when Anthem purchased Amerigroup in 2012, it more than doubled its Medicaid membership while expanding into 20 new states."

UnitedHealthcare, meanwhile, expanded into Medicare by partnering with AARP to offer Part D prescription coverage and buying regional plans that had Medicare Advantage business.

At the same time, these insurers have exited a number of state ACA marketplaces, citing financial uncertainty. To stabilize insurance markets across all segments and ensure consumer access to plans, the authors say, federal and state law could require any carrier participating in Medicare or in state Medicaid programs to also offer individual-market plans in those geographic areas. Such “tying” requirements would make it more difficult and costly for plans to jump in and out of markets.

Source: Health Affairs