September 27, 2018
Mark Farrah Associates (MFA) assessed the latest year-over-year enrollment trends, comparing second quarter 2017 with second quarter 2018 segment membership based on data filed in statutory financial reports from the NAIC (National Association of Insurance Commissioners) and the CA DMHC (California Department of Managed Health Care). As of June 30, 2018, 264.1 million people received medical coverage from U.S. health insurers. This number is down from 264.7 million or approximately 660,000 members, from a year ago. Mid-year enrollment trends indicated continued membership gains for Medicare Advantage (MA) while Managed Medicaid, Individual, and Employer-Group risk business experienced year-over-year declines.
Segment by Segment Enrollment Trends
As of June 30, 2018, Medicare Advantage (MA) continued to experience a substantial membership increase as 1.2 million more seniors chose an MA plan as compared to the same period a year ago. In contrast to enrollment increases in Medicare Advantage, Managed Medicaid saw a decline of over 407,000 members, year-over-year, as compared to the addition of 1.35 million Medicaid beneficiaries between second quarter 2016 and second quarter 2017. On and off exchange, individual business lost approximately 1.7 million members, and the Employer-Group risk segment including Federal Employees Health Benefit Plans (FEHBP) business experienced a decline of over 327,000 members. Over the same period, the Employer-Group ASO segment collectively enrolled 120.2 million people at mid-year 2018, a gain of over 541,000 members.
Although the individual segment continues to bear the burden of healthcare debate and membership in this sector has steadily declined, there are favorable indications of improvement for the coming year. The Affordable Care Act's (ACA’s) on-exchange program has historically been unsustainable due to increased medical claims, premiums, adverse selection, and immature risk pools, forcing several insurer exits from the Marketplace and resulting in fewer plan options for individuals. However, insurers reported more stable financial results for their exchange business in 2018, and many are considering expansion plans for 2019. Nonetheless, further revisions to the law will likely impact the future of on-exchange business. In addition, according to a Kaiser Family Foundation article, Changes in Enrollment in the Individual Health Insurance Market, the decline in overall individual enrollment was primarily a result of off-exchange market membership due to significant premium increases in 2017 and 2018. As the 2019 open enrollment period, which runs from November 1, 2018 through December 15, 2018, is soon approaching, individual market stability remains a wait and see proposition for the health insurance industry.
Even with recent declines in membership, Medicaid continues to be the largest health program in the United States as measured by enrollment. Medicaid funding is compounded by rising medical costs and tight state budget constraints as it also continues to be the largest state budgetary expenditure. Currently, 34 states including the District of Columbia have chosen to expand their Medicaid programs under the ACA, with Virginia being the latest to adopt Medicaid expansion after passage through the state Senate this past May.
Of the 17 states that have not expanded, Utah, Idaho and Nebraska continue to consider Medicaid expansion. Alabama and Michigan recently submitted waiver requests for Medicaid work requirements to the CMS. With a proposed start date of January 1, 2020, the conditions require beneficiaries to work 80 hours per month in order to remain covered under Medicaid. If this were to pass, the total number of states with approved work requirements through the CMS would increase from four to six. On the other hand, California is seeking to prohibit its health department from seeking a waiver that would impose Medicaid work requirements. If approved, California would be the first state to prohibit Medicaid work requirements.
As previously mentioned in MFA’s recent brief, Mid-Year 2018 Health Insurance Segment Profitability Insights, with continued efforts to regulate policies and provide more flexibility for MA programs, the Centers for Medicare and Medicaid Services (CMS) issued final updates to the Medicare Advantage and Part D Prescription Drug programs for 2019 in its Final Rule. Some major provisions for CY 2019 include changes to benefit uniformity requirements, marketing rules, and the star rating process. In addition, a 3.4% on average rate increase is expected for Medicare Advantage and Part D plans in 2019, a significant increase from the 1.84% percent rate increase proposed in the February Advanced Notice and Draft Call Letter. MA plans will compete by offering new pricing and product options to beneficiaries with the Annual Election Period (AEP) for Medicare Advantage and prescription drug plans beginning October 15, 2018. Stay tuned for MFA’s Business Strategy Brief in October that will present a snapshot of the 2019 Medicare Advantage market with insights on plans that will be vying for business during the upcoming AEP.
About the Data
The data used in this analysis brief was obtained from Mark Farrah Associates' Health Coverage Portal™ database. It is important to note that MFA estimated second quarter 2018 enrollment for a small number of health plans that are required to report quarterly enrollment but hadn’t yet filed. Employer group ASO figures may be estimated by Mark Farrah Associates using credible company and industry resources. Individual, Non-Group membership reported by some carriers may include CHIP (Children’s Health Insurance Program).
These adjustments may have resulted in moderate understatement or overstatement of enrollment changes by segment. Findings reflect enrollment reported by carriers with business in the U.S. and U.S. territories. Data sources include NAIC (National Association of Insurance Commissioners) and the CA DMHC (California Department of Managed Health Care). As always, MFA will continue to report on important plan performance and competitive shifts across all segments.
About Mark Farrah Associates (MFA)
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™, 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.
Healthcare Business Strategy is a free monthly brief that presents analysis of important issues and developments affecting healthcare business today. If you would like to be added to our email distribution list, please submit your email to the "Subscribe to MFA Briefs" section in the grey area at the bottom of the page.