August 14, 2023
Health plans across the country submitted their Supplemental Health Care Exhibits (SHCE) on April 1, 2023, as part of the 2022 National Association of Insurance Commissioners’ (NAIC) annual financial statements. The SHCE contains financial performance metrics, membership, and preliminary MLRs (Affordable Care Act’s (ACA’s) Medical Loss Ratios) at the state level. Subscribers to Mark Farrah Associates’ (MFAs) Health Coverage PortalTM or the SHCE & MLR Data have access to this important information. MFA examined some key findings from its latest analysis of the SHCE, including a focus on performance within Individual and Small Group comprehensive insurance segments. Plans in these two segments face the added constraint of a standard (minimum) MLR.
Segment Profitability Overview
Beginning with the individual segment, year-end 2022 membership was almost 13.8 million members, up from 13.2 million members in 2021. This is its highest point since 2016. While segment membership is trending up, segment profitability for health insurance companies is marginal, at $0.5 billion underwriting gain or 0.5% of adjusted premium revenues for 2022.
While the declines in small group segment membership continued in 2022, down year-over-year by 3.6%, to 9.2 million, the segment remains more profitable per member than the large group segment. The segment has reported nearly $10 billion in cumulative underwriting gains since 2018. The underwriting gain of $1.4 billion, for 2022, was up by 48% from 2021.
Individual Comprehensive Segment
After reporting a loss last year, the Individual segment reported a gain of $0.5 billion in 2022. While profits were still down, the segment experienced enrollment growth of 4.8%, to 13.8 million members for 2022. Premiums increased 2.2%, to a segment average of $539 premiums PMPM (per member per month**). The average medical claims PMPM of $481 for 2022 was a decrease of 0.3% on a PMPM basis from 2021. In comparison, the average medical claims PMPM of $482, in 2021, was a 19.5% increase over 2020. Focusing on the segment leaders for this analysis, we will look at four-year trends in membership, medical claims incurred PMPM, adjusted premium PMPM, and their SHCE-reported MLR**.
Segment leadership is based on 2022 SHCE-reported membership by company. Centene’s individual enrollment decreased in 2022 by 4.1%, ending its historically steep growth curve. Both Oscar Health and Bright Health joined the top Individual plans from 2021 to 2022, growing 114% and 72%, respectively. The entire Individual segment grew by 633,000 members in 2022.
Health insurers reported a 7.9% increase in total spending on medical costs for the 2022 Individual segment. In contrast, the average incurred claims PMPM decreased from $482 in 2021 to $481 in 2022, a 0.3% reduction. HCSC (Health Care Service Corporation) experienced the largest increase, rising 2% to $584 PMPM in 2022, from $572 PMPM in 2021. Bright Health’s decline in incurred claims PMPM was primarily driven by a 50% increase in net reinsurance recoveries.
Premiums PMPM grew between 2021 and 2022 by 2.2% to a peak of $539 PMPM. For 2022, HCSC reported a 7.4% increase in premium PMPM, the largest among the top 5 plans. Bright Health’s premium PMPM drop of almost 13% was impacted significantly by $2 billion in accrued risk adjustment payments due.
The Medical Loss Ratio (MLR) illustrates the relationship between premiums and medical costs. For the segment leaders, Guidewell (also known as Florida Blue) was the only carrier to report an increase for its average 2022 MLR. HCSC experienced a large increase in their 2021 average MLR due in part to significant risk corridor revenue (from previous years) that was recognized in 2020, leading to an abnormally low MLR.
It is important to note that Mark Farrah Associates is reporting all data as filed with the NAIC (National Association of Insurance Commissioners) in the annual SHCE. We are not adjusting the data to account for differences in the number of reporting plans between 2019 and 2022. For this analysis, MFA has calculated a weighted average MLR** based upon adjusted premiums.
Small Group Comprehensive Segment
While the Small Group segment continues to lose membership, down another 3.6% for 2022 with small businesses opting to either self-insure or drop health insurance coverage for their employees, overall segment profitability remains strong. Focusing on the segment leaders for this analysis, we will look at four-year trends in membership, claims incurred PMPM, adjusted premium PMPM and segment leaders’ SHCE-reported MLR.
The five segment leaders, based on membership remained unchanged from 2021. These carriers are UnitedHealth, HCSC, Elevance (formerly Anthem), CareFirst and Blue Cross Blue Shield Michigan (BCBS MI). UnitedHealth experienced the largest decrease in membership of the top plans, reporting a 14.2% drop in enrollment. CareFirst was the only leading carrier to report an increase in small group members in 2022. Overall, the segment membership was down 344K members for 2022.
Average incurred claims PMPM increased from $448 in 2021 to $459 in 2022, a 2.3% increase. CareFirst reported the largest increase in incurred claims PMPM among the segment leaders with a 6.8% year-over-year change. BCBSMI reported the lowest increase among the segment leaders, with a 2.1% change for the period.
Average adjusted premium PMPM for the segment rose from $521 in 2021 to $539 in 2022, a 3.6% increase. Despite significant year-over-year changes in the last four years, Small Group PMPM premiums have increased an average of 2.7% annually, since 2019. All five segment leaders reported increases in premiums PMPM for 2022. Elevance’s premium PMPM increased 7.1% over 2021, the largest increase among the top plans for this segment.
Overall, the leading plans have been able to better manage MLRs within the Small Group segment as compared to larger challenges in the Individual segment. For 2022, the most notable among the segment leaders was Elevance and UnitedHealth’s 81.0% average MLRs, both entities had premiums PMPM over $600 for the Small Group market.
For both the Small Group and Individual segments, underwriting gains still have not returned to pre-pandemic levels. Premium PMPM growth for the Individual segment has stabilized with low single digit changes since 2019, which is good news for consumers. While both segments have been impacted by the pandemic-influenced seesawing of medical spending particularly between 2020 and 2021, both segments were profitable for insurers in 2022. The growth of enrollment in the Individual segment that began in 2020 continued through 2022. This growth has continued through the first quarter of 2023. Mark Farrah Associates will have more to report on 2023 enrollment and profitability trends in the coming months.
* PMPM– Per Member Per Month is an amount divided by member months; one member enrolled for 12 months equals 12 member months.
** Weighted Average MLR – For analysis purposes, Mark Farrah Associates calculated average preliminary MLRs weighted on the adjusted premiums for each company by segment. The MLRs used in the calculation are average ratios based upon 2019 – 2022 as reported in the NAIC’s Supplemental Health Care Exhibit.
The data used in this analysis brief was obtained from Mark Farrah Associates' Health Coverage Portal TM using Supplemental Health Care Exhibit (SHCE) data as reported in the NAIC Annual Financial Statement. CA managed care plans do not file the SHCE. CHIP enrollment is reported under government business in the SHCE. Each year, MFA updates its products with the latest SHCE data. Additionally, MFA maintains financial data as well as enrollment and market share for the health insurance industry in the subscription-based Health Coverage Portal TM.
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Mark Farrah Associates (MFA) is a leading data aggregator and publisher providing health plan market data and analysis tools for the healthcare industry. Our product portfolio includes Health Coverage Portal™, County Health Coverage™, 5500 Employer Health plus, Medicare Business Online™, Medicare Benefits Analyzer™, and Health Plans USA™. For more information about these products, refer to the informational videos and brochures available under the Our Products section of the website or call 724-338-4100.
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