Here’s yet more data working against health plans attempting to justify rate hikes. Medical expenses for 852 health plans declined 1.6% through nine months of 2010, according to an analysis by Weiss Ratings (Jupiter, FL) of state health plan regulatory filings. Weiss expects the plans to finish 2010 with a 3% decline in medical expenses, the first time in 10 years medical costs haven’t risen. Gavin Magor, senior insurance analyst for Weiss, notes:
This is a critical change from the steady and rapid increases of prior years. If it continues in 2011, it should help boost health insurer profits while pressuring companies to curb premium increases and give consumers some much-needed relief.
Magor’s comments don’t take into consideration new taxes and rebates tied to medical cost ratio regulations under healthcare reform. Nor is Magor clear on exactly why costs declined in 2010; however, he points to some likely suspects. Membership among the plans was down about 2.6% through nine months, hospital days were down 2%, and office visits were down about 3%. Cost shifting from health plans to members is also a likely factor, he says. Magor also says it’s likely some members are foregoing care or price-shopping given the difficult economy.
The data doesn’t include California, which has different health plan financial reporting requirements than other states. Furthermore, the data is muddy because it encompasses all lines of business in the plans’ filings, which in addition to commercial HMO may also include vision, dental, behavioral, Medicare, Medicare Supplement, Medicaid, Federal Employees Health Benefits Plan and other members.
Source: Weiss Ratings
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