Health insurance industry profits are expected to fall at least 10% in 2011, according to the Outlook for Managed Care 2011.
Among the healthcare reform-related pressures on profits beginning in 2011, new minimum medical cost ratio regulations will likely force health plans to rebate up to $1.5 billion. Health insurers will also be saddled with new taxes.
Even without reform, the report notes, health plans face a variety of structural issues – including the continued deterioration of fully funded membership and the shift toward low-premium high-deductible health plans. The advent of ACOs also threatens the relevance of health plans by diminishing the industry’s central role in managing risk.
Faced with both structural and reform-related profit pressures, health plans are re-evaluating every aspect of their business, the report says. Initiatives include layoffs, international expansion, diversification, provider payment reform, retail-based and consumer-driven healthcare, slashing broker commissions, and using of technology to streamline administration, facilitate member decision-support and improve population management.