United Hospital Fund Analysis Finds That Most Health Plans Reported Profits, But Smaller Ones, in 2008

Increased Public Program Enrollment and Medicare Advantage Business Helped Offset Individual and Group Commercial Enrollment Declines

Release Date: 03.17.2010
Contact: rdeluna@uhfnyc.org
Contact Phone: 212 494 0733

Buoyed by strong returns in Medicare Advantage business, most commercial health plans weathered the onset of our national recession to maintain profitability in 2008, according to a new report from the United Hospital Fund. Concurrently, increasing public program enrollment pushed two health plans specializing in that business beyond the $1 billion premium mark.

The report, The Big Picture Updated: Current Status of New York’s Health Insurance Markets, follows up on a similar October 2009 Fund publication, using more recent data on health plan enrollment and financial results to profile New York’s private markets and state and federal public managed care programs. Among the report’s findings:

• Despite a decline in commercial group enrollment of over 500,000, the loss of 200,000 jobs in New York between July 2008 and July 2009, and modest inflation rates, health plans collected over $46 billion in premiums for coverage in 2008, an 11 percent jump over the 2006 level.
• Aggregate health plan profits dipped below $800 million for the first time since 2001.
• Article 43 insurers (e.g., Excellus and EmblemHealth), which operate HMOs and indemnity plans under nonprofit corporate umbrellas, posted losses of over $166 million (a -1.1% margin), compared to gains of over $480 million in 2006.
• The state’s Prepaid Health Services Plans, which specialize in public managed care programs, such as Medicaid Managed Care and Family Health Plus, increased their collective market share to nearly 12 percent, reflecting growing enrollment in public programs; two of these plans—Fidelis and HealthFirst—each exceeded $1 billion in premiums for the first time.
• Medicare Advantage business continued to be a reliable source of health plan profits, accounting for about $400 million.
• HMOs earned less money on their Small Group business than they did on their individual and Healthy NY lines.

“Medicare Advantage income continues to be critical to health plans’ bottoms lines,” says author Peter Newell, co-director of the Fund’s Health Insurance Project, “but if changes or reductions in the payments are adopted either as part of federal deficit reduction or as part of health care reform to offset coverage expansions, health plans—and consumers—will have to adjust to a vastly different landscape.”

Written by Mr. Newell, Allan Baumgarten, a consultant, and Jenny Heffernan, research assistant, The Big Picture Updated: Current Status of New York’s Health Insurance Markets is free to download.

Putting the new report in context, Fund President Jim Tallon says, “Enrollment in commercial markets continues to decline, there’s a growing dependence on public insurance programs, and our state is facing the biggest fiscal challenge in decades. These concurrent trends are cause for concern.”

The earlier report, The Big Picture: Private and Public Health Insurance Markets in New York, combines a statistical overview from 2006 with a detailed primer on insurance markets, making it both a useful reference and a resource from which to draw more detailed comparisons.

Support for The Big Picture Updated: Current Status of New York’s Health Insurance Markets was provided by the New York State Health Foundation.

About the United Hospital Fund: The United Hospital Fund is a health services research and philanthropic organization whose mission is to shape positive change in health care for the people of New York.

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