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 The leading web portal for pharmacy resources, news, education and careers September 22, 2017
Pharmacy Choice - Pharmaceutical News - A.M. Best Special Report: Although Managed Medicaid Enrollment, Premiums Continue to Increase, Margins Dip - September 22, 2017

Pharmacy News Article

 7/17/17 - A.M. Best Special Report: Although Managed Medicaid Enrollment, Premiums Continue to Increase, Margins Dip

By a News Reporter-Staff News Editor at Managed Care Weekly Digest Managed Medicaid premium and enrollment growth in the U.S. health insurance industry remained favorable, although at a lower rate compared with the previous two years, which recorded substantial increases, according to a new A.M. Best special report (see also A.M. Best).

The Best's Special Report, "Managed Medicaid Enrollment & Premiums Continue to Increase, Margins Dip," states that managed Medicaid net premium income rose by 13.7% in 2016 to $212.1 billion following year-over-year percentage increases of 32.8% and 35.3% in 2015 and 2014, respectively. Enrollment also grew substantially in 2014 and 2015 by 31.7% and 13.2%, respectively, but slowed to a 4.1% increase in 2016. Managed Medicaid enrollment topped 50 million in 2016. The publicly traded companies, which for the purposes of this study exclude Anthem Inc., as it was counted as a Blue Cross Blue Shield (BCBS) plan, service the largest share of Medicaid managed care membership, accounting for 46.8% of industry enrollment in 2016, relatively flat from 2012 levels.

Underwriting margins for Medicaid managed care business were on an improving trend from 2013-2015 before reversing in 2016. Medicaid underwriting gains had been growing much faster compared with the commercial segment due to the robust Medicaid premium growth and contraction in commercial profitability as a result of pressure from health exchange losses. However, in 2016, nearly 20% more companies posted an underwriting loss for the Medicaid business compared with 2015, leading to an underwriting margin of 0.8% in 2016. (California-domiciled companies were excluded due to a lack of information outlining underwriting gains by line of business.)

The slowed Medicaid premium and enrollment growth in 2016 comes as a result of fewer states adopting Medicaid expansion and the bulk of qualifying and easily reachable persons already enrolled. A.M. Best believes there are still ample opportunities for health insurers to grow their managed Medicaid premiums and revenues as states expand Medicaid to additional programs such as those individuals eligible for Medicare and Medicaid (i.e., dual eligibles), behavioral health, and long-term services and supports. As of the end of 2016, 32 states, including the District of Columbia, had expanded their Medicaid programs, and drastic differences can be seen at insurers that operate in states that have expanded Medicaid versus those that operate in non-expansion states. Insurers that operate solely in expansion states have reported enrollment growth of 80.9% and premium growth of 144.7% from 2012-2016, while insurers operating in non-expansion states have seen enrollment growth of 40.9% and premium growth of 100.4% over the same time period.

Managed Medicaid has been one of the material sources of the health insurance industry's growth in recent years, and its share of overall health premium income has grown to 26.5% in 2016 from 10.2% in 2007. A.M. Best notes the current and significant uncertainty in the health insurance industry, and the potential that the Medicaid Expansion initiative could potentially be rolled back. Medicaid funding also remains a concern for health insurers, and the future of the funding going forward remains uncertain. A.M. Best will continue to engage in dialogues with health insurers about the impacts that the Medicaid line of business has on their overall operations and financial results.

To access the full copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record-code=263376. A.M. Best is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com. Copyright 2017 by A.M. Best Rating Services, Inc. and/or its subsidiaries. ALL RIGHTS RESERVED. View source version on businesswire.com: http://www.businesswire.com/news/home/20170706006066/en/

Keywords for this news article include: Medicaid, A.M. Best, Investing, Managed Care, Health Policy, Health Insurance.

Our reports deliver fact-based news of research and discoveries from around the world. Copyright 2017, NewsRx LLC



(c) 2017 NewsRx LLC

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