Health Plan Profits to Nosedive in 2014, but the Future is Still Bright

January 14, 2014

Health insurance industry profits are projected to fall about 5% to 6% in 2014, hammered by taxes associated with healthcare reform, Medicare Advantage reimbursement cuts, margin pressures in certain commercial lines, and slower than expected exchange implementation, according our soon-to-be-released Outlook for Managed Care 2014.

But the decline in 2014 profits isn’t the whole story.  Profit growth will begin to normalize in 2015 and beyond.  By then, plans will have digested the initial hits to margins in both the government and individual lines.  They will also start to benefit from expanded enrollment in Medicaid, Medicare and individual.

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Happy Holidays

December 20, 2013

We’ll be back after the New Year.


TN Medicaid Awards Expected Monday

December 13, 2013

Citi on the Tennessee managed Medicaid rebid–a contract serving 1.2 million members and split between Blue Cross Blue Shield of Tennessee, UnitedHealth and WellPoint:

Medicaid re-bids usually have far more risk than reward for the managed care stocks, but that’s not the case here — If United or WellPoint were to lose the Tennessee business, the impact on either stock would likely be immaterial, whereas a win for Centene, Molina, or WellCare would have significant implications, as the state could ultimately be worth more than $1.7 billion in revenue. As a very short-term trade, it makes sense to own a basket of these three stocks into Monday’s announcement, since a successful bid could ultimately add $0.60-0.75 per share in earnings (12-25%), assuming pre-tax margins ultimately reach 3%.

Update: Looks like the three incumbents will hold onto  the contract.


Is this the Future for Health Plans?

December 3, 2013

Industry bellwether UnitedHealth Group projects 2014 health plan profits to fall about 15% in 2014 while earnings from the company’s Optum healthcare technology and services division soar.  Is this the future for health plans as reform takes a big bite out of industry profits?  Not so fast.  United says that after the initial hit from reform cycles through, health plan profits will accelerate through 2018 and could double over the next seven to 10 years.

United2014Projections


Meanwhile, on the Backend of Healthcare.gov

December 3, 2013

From the Washington Post:

The enrollment records for a significant portion of the Americans who have chosen health plans through the online federal insurance marketplace contain errors — generated by the computer system — that mean they might not get the coverage they’re expecting next month.

The errors cumulatively have affected roughly one-third of the people who have signed up for health plans since Oct. 1, according to two government and health-care industry officials. The White House disputed the figure but declined to provide its own.

The mistakes include failure to notify insurers about new customers, duplicate enrollments or cancellation notices for the same person, incorrect information about family members, and mistakes involving federal subsidies.


Healthcare.gov Makes Progress

December 2, 2013

From HHS:

The new management system and instrumentation have helped improve site stability, lower the error rating below 1%, increase capacity to allow 50,000 concurrent users to simultaneously use the site and will help drive continuous improvement on the site. While we strive to innovate and improve our outreach and systems for reaching consumers, we believe we have met the goal of having a system that will work smoothly for the vast majority of users.

HealthcareGovResponseTimes


Opinion Poll Trends Negative on ObamaCare

November 26, 2013

From the Kaiser Family Foundation:

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