HMO Enrollment Concentrated in National Firms
InterStudy Releases Updated HMO Industry Report For Immediate Release Contact: Tammy Lauer (tlauer@interstudypublications. com) or Caryn Mohr (cmohr@interstudypublications. com) or Krista Bray Jenkyn (kjenkyn@interstudypublications. com) 1-800-844-3351 or 651-645-3377
ST. PAUL, Minn. (PRWEB) November 2, 2001
Nearly three-quarters (74.1%) of HMO members are enrolled in a national managed care firm. InterStudy defines national managed care firms as organizations operating HMOs in two or more states with combined enrollment of 10,000 or more members. Over the past five years (January 1997 to January 2001), HMO enrollment in national firms grew by 14.6%, while the number of HMOs affiliated with a national firm dropped by 17.4%. These shifts reflect significant merger, acquisition and consolidation activity among HMOs.
These and other highlights appear in InterStudy Publications? latest HMO Industry Report 11.2, Part II of the InterStudy Competitive Edge series. Published as a companion piece to the recently released HMO Directory 11.2, this report provides comprehensive analysis of the HMO industry as of January 1, 2001.
The HMO Industry Report focuses on enrollment trends, lists the top 25 largest - and fastest-growing HMOs, analyzes sources of HMO enrollment growth and decline, and presents state-by-state enrollment information. In addition, the HMO Industry Report 11.2 provides data related to HMO finances and premiums, as well as an analysis of changes in national managed care firms from 1997 to 2001.
National Managed Care Firms 1997-2001
As of January 1, 2001, there were 26 national managed care firms in the United States, and a total of 323 HMOs operating under these firms? banners. These 323 plans affiliated with a national firm accounted for 74.1% of total HMO enrollment.
National firms, like the HMO industry overall, experienced a decrease in total HMO enrollment in the past year. HMO enrollment in national firms decreased from 59.9 million as of January 1, 2000 to 59.0 million as of January 1, 2001. This marks a 1.6% decrease.
Many national firms have experienced significant merger, acquisition or consolidation activity over the past five years. While enrollment in national firms increased from January 1997 to January 2001, the number of plans affiliated with a national firm decreased by 17.4%. During this period, 110 HMOs were lost nationwide, and more than half (68) of the lost HMOs belonged to a national managed care firm. The HMO Industry Report 11.2 provides a list of national firms as of January 2001 with comparative data for those firms as of January 1997.
The number of plans affiliated with The Blue Cross and Blue Shield Association has declined steadily since January 1997, falling from 84 HMOs to 66 HMOs as of January 2001. This marks a decrease of 21.4%. However, while the number of Blues plans decreased, total enrollment in Blues plans increased by more than 3.1 million during this time.
Total HMO Enrollment
The total HMO enrollment stabilized during the second half of 2000, after decreasing during 1999 and the first half of 2000. Between July 1, 2000 and January 1, 2001, HMOs added approximately 200,000 enrollees, for a slight enrollment increase of 0.3%.
While HMO enrollment appears to be stabilizing, the number of HMOs operating in the United States continues to drop. This can be explained by industry mergers, plan consolidations and plan closures. The total number of HMOs reached 541 as of January 1, 2001, dropping from 568 as of January 1, 2000.
More than one-quarter of HMO enrollment is located in the Pacific region, which includes Alaska, California, Hawaii, Oregon, Washington and Guam. Of the 20.6 million HMO enrollees in this region, over 18 million (87.6%) are located in California.
HMO Medicare enrollment is decreasing, dropping by almost half a million enrollees between January 1, 2000 and January 1, 2001. As of January 1, 2001, there were 6.1 million HMO Medicare enrollees, 7.2% fewer than the preceding year.
Recent data from The Centers for Medicare & Medicaid Services (formerly HCFA) indicates that another 536,469 Medicare+Choice enrollees will be affected by partial or complete pull-outs of managed care firms in calendar year 2002.
The number of Medicaid clients served by HMOs continues to grow, though at a slower pace than experienced during the 1990s. The figure on the following page shows the trend in HMO Medicaid growth rates.
HMO Medicaid enrollment increased by more than 600,000 between January 1, 2000 and January 1, 2001. As of January 2001, there were 206 HMOs offering Medicaid to a total of 11.4 million Medicaid enrollees. While HMO Medicaid enrollment increased, the number of plans offering Medicaid dropped by 14 since January 1, 2000.
HMO Finance and Premium Trends
HMO operating profit margins improved in 1999 and 2000, but remain lower than 1994 levels. This increasing profitability represents mixed news for consumers, as it reflects rising premiums.
The improving performance of the least profitable plans? those represented by the 25th percentile? reflects the exiting of some unprofitable plans. InterStudy? s National HMO Financial Database shows that HMOs ceasing operations in 1999 had a median operating profit margin of 11.8% as of year-end 1998, compared to the overall industry median of 3.5% for that time.
The proportion of revenues spent on administrative expenses continues to fall. As of year-end 2000, the median administrative expense ratio among HMOs was 13.2%. This continues a trend observed since administrative expense ratios peaked in 1996.
Growth in premium revenues per member, per month (PMPM) has paralleled growth in medical expenses since 1996. Before that time, HMOs artificially suppressed premium rates to gain market share. Aggressive premium increases by HMOs in the last few years have contributed to overall HMO profitability since 1998, although HMO profitability is diminished by high medical costs.
The average national premium for traditional HMO family coverage increased 13.2% from January 1, 2000 to January 1, 2001, rising from $493 to $558. For traditional HMO single coverage, average national premiums increased by 11.9% during this time, from $168 to $188.
The Northeast region has the highest average monthly single and family rates for traditional HMO premiums. In the Northeast region, rates are approximately $50 higher than the national average single rate and $83 more than the national average family rate.
The Pacific region has the lowest monthly average rates for single and family traditional HMO premiums. This region? s average single traditional HMO rate is approximately $32 lower than the national average single rate of $188. The family rate for the Pacific region is $98 less than the national average family rate of $558.
The InterStudy Competitive Edge series is published semi-annually by InterStudy Publications, a publications firm specializing in research and reports for market-driven health care. Part I, the HMO Directory 11.2, was published in September. Part III, the Regional Market Analysis, examines market structure and dynamics of metropolitan markets served by HMOs. The Regional Market Analysis 11.2 will be published in November.
The complete InterStudy Competitive Edge series (Parts I, II and III) is available from InterStudy for $610 (prepaid). Each book is also sold separately. The HMO Directory and HMO Industry Report are available for $245 each (prepaid) and the Regional Market Analysis is available for $275 (prepaid). If you have any questions or would like to place an order, please call 1-800-844-3351, or visit our web site at www. interstudypublications. com.