Mark Farrah Associates has released its regular analysis of large health plan enrollment and profitability trends, this one covering the first quarter of 2015. (MFA Analysis) The seven top health plans–Aetna, Anthem, Cigna, HCSC, Humana, Kaiser, and UnitedHealth–collectively insure or administer health benefits for over half of Americans with health coverage. Total enrollment growth for this group from Q1 2014 to Q1 2015 was 6.4 million people, to a total of 147.5 million. Operating income grew from $100 million to $111 million in that time frame. Sounds like a set of companies in distress, right, really need to consolidate.
Anthem reported the largest gains, up 1.6 million members to a total of 38.5 million, or 4.3% growth. UnitedHealth was second in total members at 37.7 million, a 1.3 million person increase. Other notable changes included HCSC increasing insured members by 17.6% and Humana by 19.5%. Humana’s growth was concentrated in the MA market. In the same period, Humana experienced a 9.9% drop in self-funded enrollees. Kaiser and Aetna had generally respectable growth. Cigna lagged a bit. Although profit margin as a percent dropped slightly for the group, in dollar terms it was up. Not-for-profit Kaiser had the highest operating profit margin in the first quarter at just under 7%, followed by UnitedHealth at around 6%. The companies claim reform law fees are cutting into their profitability but it doesn’t look like much of an impact. For those plans that reported exchange enrollment, Aetna had 950,000 in the first quarter, Kaiser 300,000, UnitedHealth 570,000 and Anthem 898,000.
Looking at these numbers once again shows why further consolidation among these insurers would be ill-advised. There is no way any federal or state regulator should approve the pending mergers among four of these large plans. Higher prices, higher costs, poorer service and overall bad management that depresses share prices are sure to follow. A vibrant, competitive health insurance market is essential and I am not sure we have one now in many geographies. Certainly these plans all seem to be financially quite healthy and doing fine in the market as it is.