June 27, 2006
Health Insurance Market Share: It’s All About Enrollment

Mark Farrah Associates analyzes health plans in order to track market share, penetration and product mix throughout the U.S. health insurance industry. Competitive factors such as economies of scale, operational efficiencies, provider contracting arrangements and pricing leverage all hinge on the size and diversity of a company’s enrollment base.

From year to year, health plans attempt to increase revenue organically by retaining customers and attracting new business. In the current environment, they are often operating in saturated “takeaway” markets, whereby they must take business away from competitors in order to grow. The competitive swap was fairly substantial in some markets last year.

Growth through mergers & acquisitions is another way health plans grow their business. At any point in time, some plans are preparing themselves to be acquirers; others are actively positioning themselves to be acquired. Mergers have dramatically changed the health insurance landscape in recent years and more activity is expected this year.

Health Plans USA™, our comprehensive enrollment and market share database, provides a market share barometer for the industry. With enrollment segmented by commercial and government lines, geographic selects are presented by parent company and plan-level for easy market share assessments. This reliable tool is easy to use for tracking leaders and laggards. As a complement to this database, Mark Farrah Associates just published Health Insurance Share™, the current top 20 health insurers by U.S. region. This brief presents insights from our recent market assessment.

Market Leaders

A look at market leaders across six regions of the United States reveals that health insurance competition still varies geographically. This assessment ranks health insurers by medical membership and market share for almost 128 million covered lives nationwide. It includes risk-based business from both government and private payors. Kaiser has a strong lead in the West while Health Care Service Corporation (HCSC) dominates in the Southwest. WellPoint holds a significant lead in the South and has a slight edge in the Midwest. UnitedHealth is the forerunner in the Mid-Atlantic region while Blue Cross Blue Shield of Massachusetts is dominant in New England.

Some leaders (Blue Cross Blue Shield of Massachusetts) prevail with highly concentrated enrollment in just one state. Nonetheless, with economies of scale, these large regional players still have a competitive advantage in their markets. Nationwide market share for industry leaders such as WellPoint and UnitedHealth is an important competitive force that all carriers must track.

Segment Leaders

Recognizing that product mix or specialization can have a critical affect on earnings and profit, the industry has become much more focused on market segmentation in recent years. Some plans have developed sophisticated actuarial and underwriting models based on market segmentation strategy. While many strive to maintain a diversified book of business, others have established expertise in niche markets such as Medicare or Medicaid.

Not surprisingly, market leadership varies by market segment and geography. Different companies lead the commercial, Medicare and Medicaid markets throughout the country.

Medicaid

Health insurers cover more than 17.5 million Medicaid members nationwide. UnitedHealth Group, through its AmeriChoice business in New York and New Jersey, leads Medicaid managed care enrollment in the Mid-Atlantic. Centene’s Midwest market share of 15.3% is just slightly larger than CareSource’s share. CareSource is an Ohio-based Medicaid managed care plan enrolling 14.7% of Midwest Medicaid enrollees. WellPoint plans lead this segment in the New England and West Coast regions. AmeriGroup, with a Texas concentration, is a dominant force with 33% market share in the Southwest. WellCare, with a Florida concentration, is the number one Medicaid plan in the South with 24% of the market.

Medicare Advantage

Almost 7 million Medicare beneficiaries were enrolled in Medicare Advantage plans as of March 31, 2006. The latest figures indicate Medicare Advantage plans gained about 1 million members in the 1st quarter of 2006. UnitedHealth, Humana, Kaiser as well as several Blue Cross and Blue Shield plans have significant market share in various regions throughout the country. Market share figures in this assessment are based on December 2005 data and do not include Medicare Part D. Look for the latest Medicare Advantage market share data in Health Plans USA™. For more comprehensive insights about Medicare business, including PDP enrollment, refer to Medicare Business Online™.

Commercial

Commercial market leaders by region, for the most part, mimic those identified for the entire industry. However, market share varies within each region dependent upon the number of competitors with a significant presence. Commercial carriers nationwide enroll more than 104 million in risk-based plans mostly sponsored by employers.

The tables that follow present the market leaders by segment for six regions of the United States. Click here to access a six-region map of the U.S. for reference.

Source:Health Plans USA™ and Health Insurance Share™ (Mark Farrah Associates)

Health Insurance Market Share Tools

Mark Farrah Associates is committed to presenting accurate measures of health insurance market share and competition. Our comprehensive databases and in-depth market reports provide the best insights in the industry.

If you are currently a 50-state Health Plans USA™ subscriber, login to the portal to access your complimentary copy of Health Insurance Share™ presenting our regional assessment of top 20 insurers. Health Plans USA™ is the authoritative source for risk-based membership and market share. This product also includes baseline financial measures that reveal underwriting strengths and weaknesses by health plan.

The Health Insurer Insights™ series, our latest venture with Knowledge Source, Inc., presents profiles of leading health insurance companies, with detailed insights about risk-based and self-insured business (ASO).

Mark Farrah Associates also designs and maintains custom data portals for clients who need more comprehensive insights about health insurance competition. Portals include market share and performance data for risk-based and ASO plans.

For more information about our products and services, please contact Mark Farrah Associates (207-985-8484) or visit us on the web.

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