Financial Performance of Medicare Advantage, Individual, and Group Health Insurance Markets
We analyzed insurer-reported financial data from Health Coverage Portal TM, a market database maintained by Mark Farrah Associates, which includes information from the National Association of Insurance Commissioners (NAIC). The dataset analyzed in this report does not include NAIC plans licensed as life insurance or California HMOs regulated by California’s Department of Managed Health Care. We excluded plans that filed negative enrollment, premiums, or claims and corrected for plans that did not file “member months” in the annual statement but did file current year membership. The group market in this analysis only includes fully insured plans.1 Premiums to Medicare Advantage plans do not include payments for Medicare Part D benefits.
Gross margins were calculated by subtracting the sum of total incurred claims from the sum of unadjusted health premiums earned and dividing by the total number of members in each market. Premiums for Medicare Advantage plans primarily consist of federal payments made to plans for Medicare-covered benefits, and also include any additional amounts plans may choose to charge their enrollees. Premiums for the individual market were not adjusted to account for rebates required to be remitted to enrollees. To calculate medical expenses as a percentage of premiums (or simple medical loss ratios), we divided the market-wide sum of total incurred claims by the sum of all unadjusted health premiums earned. Medical loss ratios in this analysis are simple loss ratios and do not adjust for quality improvement expenses, taxes, or risk program payments.