Health Insurer Financial Performance Through September 2020
Individual Market. The individual market, which accounted for more than 13 million people in 2019, includes coverage purchased by individuals and families through the Affordable Care Act’s exchanges (Marketplaces) as well as coverage purchased directly off-exchange, which includes both plans complying with the ACA’s rules and non-compliant coverage. (e.g., grandfathered policies purchased before the ACA went into effect and some short-term plans). The federal government provides subsidies for low-income people in the Marketplace and includes measures, such as risk adjustment, to help limit the financial liability of insurers. Insurers in the individual market receive premium payments from enrollees, plus any federal subsidies for people in the Marketplaces.
Group Market. The fully-insured group market serves employers and their employees that are enrolled in fully-insured health plans. This market includes both small and large group plans, but excludes employer-sponsored insurance plans that are completely or partially self-funded, which account for 61% of all workers with employer-sponsored insurance. Roughly 30 million people were enrolled in fully-insured group market plans in 2019. Plans typically receive premium payments from both employers and their employees. While both average claims and average premiums for enrollees in the group market have increased, the market has been relatively stable for insurers over the past decade.
Medicaid Managed Care. The Medicaid Managed Care market includes managed care organizations (MCOs) that contract with state Medicaid programs to deliver Medicaid services to enrollees. More than two-thirds (around 54 million people) of all Medicaid beneficiaries nationally receive most or all of their care from risk-based MCOs. There is significant variation across states with regards to services that are covered by MCOs.
KFF defines comprehensive MCOs as those that provide comprehensive Medicaid acute care services and, in some cases, long-term services and supports as well. This excludes prepaid ambulatory health plans (PAHPs), prepaid inpatient health plans (PIHPs), and Programs of All-Inclusive Care for the Elderly (PACE). However, NAIC defines “Medicaid” as “business where the reporting entity charges a premium and agrees to cover the full medical costs of Medicaid subscribers” and only explicitly excludes Administrative Service Only (ASO) plans from their reporting. While we only use “medical” focus plans to help exclude any specialty plans, PAHPs, PIHPs and PACE plans may not be excluded due to NAIC’s definition of Medicaid. Additionally, for Medicaid, there are four states (Arizona, California, New York, and Oregon) that have different reporting practices and therefore consistently only have partial NAIC data available.
Mark Farrah Associates Health Coverage Portal TM includes data from fully capitated risk-based MCOs as well as non-comprehensive Primary Care Case Management (PCCM) plans and some specialty plans. PCCM plans have lower capitated payments than comprehensive MCO agreements because a primary care physician is paid a smaller flat fee for case management and care coordination responsibilities, but the remainder of services an enrollee receives are delivered on a Fee-For-Service agreement.
Medicare Advantage. The Medicare Advantage market provides Medicare-covered benefits through private plans to more than 24 million Medicare beneficiaries in 2020, with enrollment projected to increase to nearly half of all Medicare beneficiaries by the end of the decade. The federal government makes risk-adjusted payments (higher payments for sicker enrollees and lower payments for healthier enrollees) to plans (averaging $11,545 per enrollee in 2019) to cover the cost of benefits covered under Medicare Parts A and B, with additional payments for costs associated for prescription drug coverage. Some plans charge enrollees an additional premium. The majority of Medicare Advantage plans offer supplemental benefits, such as dental, vision and hearing.