Publicly Traded Health Plans Are More Profitable Than Competitors in Commercial Market, AIS Researchers Find
Atlantic Information Services, Inc. (AIS) - October 15, 2015 - Washington, DC

Publicly traded health plans serve more than half of the commercial risk market and have significantly better profit margins in their commercial lines, on average, than other companies, and the 2014 average gross profit margin for commercial risk plans was almost 14% for publicly traded companies, compared with about 9% for other companies, according to Atlantic Information Services, Inc.’s (AIS) Commercial Health Plan Market Metrics: 2014 Performance Measures for Individual, Small-Group and Large-Group Risk-Based Plans. This new report from the editors of AIS’s Directory of Health Plans provides a snapshot of the rapidly evolving commercial risk health insurance market, by assessing the impact of the individual mandate, exchanges and other Affordable Care Act (ACA) initiatives.

Commercial Health Plan Market Metrics lists each insurer with data at the national and state level to allow for comparisons within state markets. Publicly traded companies, as a group, are the best-performing insurers in this market, according to AIS’s in-house researchers, followed by Blue Cross and Blue Shield affiliates, as a group. Despite the fact that they are heavily engaged in serving sicker, high-risk members, the numbers indicate that the larger scale of public companies — all of which operate in multiple states — is a major factor in their comparative profitability.

Of the nine publicly traded insurers operating in this sector (see table), six are currently awaiting regulatory approval for three mergers to be completed during 2016: Aetna/Humana, Anthem/Cigna and Centene/Health Net. While all insurers must adjust to narrower profit potential post-ACA, publicly traded companies have the added pressure to show continued growth and value to shareholders.

Publicly Traded Health Insurers’ 2014 Commercial Market Metrics

Insurer

Gross Margin

Gross MLR*

Premium
Revenue PMPY*

Claims PMPY*

Membership

Aetna

13.33%

86.67%

$3,856.56

$3,342.35

3,194,149

Anthem, Inc.

17.04%

82.96%

$4,841.35

$4,016.52

6,145,630

Centene Corporation

26.84%

73.16%

$3,143.12

$2,299.44

36,123

Cigna Corporation

9.96%

90.04%

$5,146.54

$4,633.71

227,328

Health Net, Inc.

5.56%

94.44%

$3,811.89

$3,600.08

1,300,509

Humana, Inc.

12.05%

87.95%

$3,567.01

$3,137.16

1,562,195

Molina Healthcare, Inc.

9.80%

90.20%

$3,459.55

$3,120.66

15,044

UnitedHealthcare

14.16%

85.84%

$5,005.99

$4,297.08

2,894,022

WellCare Health Plans, Inc.

14.58%

85.42%

$2,055.93

$1,756.17

144,561

* MLR = Medical loss ratio. PMPY = Per member per year.
Note: shaded rows indicate insurers that have made bids to consolidate.
Data represent commercial risk-based ACA-qualified primary medical insurance lines for individuals and groups.

To produce Commercial Health Plan Market Metrics, AIS researchers analyzed 623 public filings to compare key profitability measures of 195 health insurers offering commercial risk-based products directly to consumers, and to small and large employer groups. Findings illustrate the true impact on the commercial risk-based health insurance market of ACA initiatives, including public exchanges, the individual mandate and essential health benefits.

The commercial risk market includes traditional employer-sponsored health insurance via small- or large-group contracts, as well as individuals and families enrolled through public exchanges or via other channels. Commercial Health Plan Market Metrics benchmarks premium revenues, claims expenses and covered lives for each company as of the end-of-year 2014 results, and calculates gross profit margins, gross medical loss ratios, premium revenues PMPY, claims PMPY and MLR PMPY for each plan. Baseline data offers straight and simple comparisons prior to factoring in any risk adjustments, administrative expenses or rebates.

For more information on Commercial Health Plan Market Metrics, including a full table of contents and sample pages, visit https://aishealth.com/marketplace/commercial-health-plan-market-metrics.

About Atlantic Information Services
Atlantic Information Services, Inc. (AIS) is a publishing and information company that has been serving the health care industry for more than 25 years. It develops highly targeted news, data and strategic information for managers in hospitals, health plans, medical group practices, pharmaceutical companies and other health care organizations. AIS products include print and electronic newsletters, websites, looseleafs, books, strategic reports, databases, webinars and conferences. Learn more at http://AISHealth.com.

Contact
Susan Namovicz-Peat, Director, Directories and Databases Division
Atlantic Information Services, Inc.
202-775-9008 ext. 3045
snpeat@aishealth.com

It's quick and easy to sign up for FREE access to AISHealth.com!

Why do I need to register?