His latest covers the state of Florida and provides what I am sure is a representative sample of what is happening across the country.
A few excerpts:
- Continued consolidation by health insurers and hospitals
systems combined with coverage expansion has improved profits for both. Profits
for Florida HMOs increased by 12% in 2018, and South Florida hospitals reported
average profit margins of 8%, their highest in recent years.
- South Florida hospitals recorded combined profits of $1.279 billion in 2018 and have posted combined profits above $1 billion for four of the past five years.
- Hospitals in the Orlando
area had average margins of 12.9% in 2018, up from 11.6% in 2016. Orlando
Health, the second largest system there,
posted net income of $531.4 million and a margin of 20%, while AdventHealth, the largest system, had
net income of $539.3 million and a 13.4% margin. Even so, inpatient days and
occupancy dropped in the region.
- The health insurance market
has grown significantly more concentrated in the last three years as companies
like Anthem and Blue Cross Blue Shield have acquired a number of HMOs. In 2018, the four largest HMO companies -- the five Blue Cross Blue Shield HMOs, Humana,
UnitedHealthcare's HMOs and WellCare -- had 64.2% of the market, compared to 51.5% two years
- As a result of their market
power and favorable claims experience, HMOs enjoyed strong profits in 2018,
particularly on their individual and Medicare Advantage plans. Florida HMOs had net income of just under $1 billion in
2018, or 2.2% of premium revenues. That compares to combined net income of
$891.1 million in 2017. Molina,
Humana and WellCare had
the highest margins. In addition, Blue
Cross Blue Shield had net income of $694.6 million on its PPO
- Medicare Advantage plans
had underwriting income of $724.9 million down from $800 million in 2016, but
still very strong. Underwriting income
for commercial (individual and group) plans increased from $172 million in 2016
to $725.3 million in 2018. Blue
Cross Blue Shield has been very successful in the individual market
and had $936.8 million in underwriting profit on its group and individual
plans. New competitors - Oscar and Bright Health - have entered the
individual market in much of the state - and premium rates have dropped for
- After years of steady growth, enrollment in Florida HMOs fell by 2.2% in 2018. Enrollment in Medicaid and commercial plans fell. UnitedHealthcare's HMOs, WellCare and Blue Cross BlueShield's PPOs added the most new enrollees.
"Blue Cross Blue Shield has been very successful in the individual market and had $936.8 million in underwriting profit on its group and individual plans."Readers of this blog know that I have made the point that individual market health insurers finally figured out how to make money in Obamacare––drive the rates high enough to make money knowing that the subsidized are immune to huge rate increases but do so at the expense of the 40% of the market that gets no subsidy.
How well is that strategy working in Florida?
Blue cross made $936.8 million in the individual––as well as the small group–– market.
How are unsubsidized consumers doing?
Going to eHealth.com and looking up the lowest available premium for a family of four––mom and dad age-40––in Orlando, the cheapest plan available is a Molina Bronze Obamacare plan with an annual premium of $13,000 a year with a per person deductible of $8,000. That means this family would have to incur $21,000 in expenses to qualify for anything other than a preventive care visit.