Michigan

Michigan Health Market Review 2019

2018 Michigan releases

Reports
HMOs at a Glance
Data Set Summary
State Links
Report Contents
Media Coverage/Presentations
Reports
Michigan Health Market Review 2019, Part One finds: Michigan HMOs and insurers posted strong profits in 2018, with Blue Cross Blue Shield and its HMOs accounting for nearly 80% of the total. These findings and others are reported in Part One of Allan Baumgarten's Michigan Health Market Review 2019. First published in 1997, this is the 23rd edition of the report analyzing Michigan's health care payer and provider markets. The Part Two report for Michigan, to be released later this year, will present his analysis of the financial performance, inpatient utilization and competitive strategies of the state's hospital systems, Baumgarten, an independent analyst based in Minneapolis, also publishes health market reports in seven other states. Key findings in this new report: * Michigan HMOs increased their strong 2017 profits by 10%, reaching a half billion dollars in net income. Although total premium revenues fell by about 3% HMOs increased their profits. The Blue Cross Blue Shield HMOs (Blue Care Network and Blue Cross Complete for Medicaid) increased their net income from $257.4 million in 2017 to $282 million in 2018, or 5.6% of underwriting revenues. The Priority Health HMOs increased their net income from $91.7 million in 2017 to $132.6 million, or 3.7% of revenues. However, Meridian Health Plan, which is the largest Medicaid plan in the state and was recently acquired by WellCare, posted losses of $88 million. * The largest insurer in the state, Blue Cross Blue Shield Mutual of Michigan, reported net income of $559.5 million in 2018, up from $295.2 million in 2017 and a loss of $226.1 million in 2016. It was profitable in all its major lines of business, including commercial plans and Medicare. Combined with its HMOs, Blue Cross Blue Shield Mutual controls 48% of the Michigan health insurance market. * After years of losses, individual health plans were strongly profitable in 2018. Michigan HMOs, mostly Blue Care Network, increased their premiums by 30% and their underwriting income grew by $200 million. Similarly, Blue Cross Blue Shield also increased in premiums for individual plans and saw its underwriting income grow from $42.7 million to $78.7 million. * With the significant exception of Meridian Health, Medicaid plans, were strongly profitable. They had underwriting income of $144 million, slightly more than in 2017. Three HMOs - Blue Cross Complete, Molina Healthcare and UnitedHealthcare Community Plan - had medical loss ratios below 80% and combined underwriting income of $173 million. * Enrollment in Michigan HMOs dropped by 1.1% in 2018. While Medicare plans grew by about 26,000 lives, enrollment in commercial plans dropped by 4.2% or 44,000 lives. Medicaid HMO enrollment also decreased by less than 1%. At the same time, Blue Cross Blue Shield added 50,000 new enrollees in Medicare and employer group plans. * Enrollment in individual health plans declined again in 2018. Individual enrollment, mostly in HMOs, dropped from 358,000 to 341,000 at the end of 2018. most of them in HMOs now. Blue Care Network is the largest insurer of individual plans, followed by Priority Health. Excerpts from the report, including the useful "Michigan HMOs at a Glance" page can be viewed at www.AllanBaumgarten.com. A subscription to Michigan Health Market Review 2019, including both Parts One and Two, can be ordered online at https://allanbaumgarten.com/product-category/michigan/ Or call 952/925-9121; E-mail address: Baumg010@umn.edu April 4, 2019

Michigan Health Market Review 2018, Part Two finds:

Michigan hospitals and health insurers report improved profits, driven by continued consolidation and coverage expansions of the Affordable Care Act

Hospitals across the state continue to enjoy growing profitability, benefiting from the increased number of persons gaining Medicaid and individual coverage. Yet, hospital systems are increasingly dependent on Medicare and Medicaid and especially vulnerable to proposed reductions in those programs. In the first nine months of 2018, Michigan health plans enjoyed improved profitability and growing enrollment.

            Part Two of Michigan Health Market Review 2018, released today, presents these findings and an examination of the competitive strategies of hospital systems in the state. Using 2017 data from Medicare cost reports and other sources, the report analyzes hospital finances and inpatient utilization for all general acute care hospitals in the Detroit area and 65 hospitals in other parts of the state. It also reports enrollment growth and profitability for Michigan health plans through September 2018. Here are the key findings in the new report:

  • Although their operating income decreased in 2017, Detroit area hospitals enjoyed a large increase in non-operating revenues and 3.7% higher net income. These hospitals, almost all of them organized into six large systems, had net income of $679.3 million in 2017, or 5.5% of net patient revenues of $12.462 billion. Their operating income decreased from $238.6 million in 2016 to $165.6 million, but they had $554 million in other revenues, including investments, philanthropy and government grants. This is the fourth straight year where these hospitals had combined profits or more than a half billion dollars. Two large systems reported major swings in net income. After three straight years of growing profitability, the Beaumont Health system, the largest in the region, saw its net income drop by 25%, from $360.5 million in 2016 to $271.8 million in 2017. The Ascension/St. John hospitals doubled their net income from $65.7 million in 2016 to $134.4 million in 2017.
  • Net income for hospitals in other parts of the state increased by about 35% in 2017, on top of an increase of 32.3% in 2016. Our analysis of data for 65 hospitals outside of the Detroit area showed that they had net income of $1.488 billion in 2017, or 8.6% of net patient revenues, up from $1.104 billion in 2016. While their operating losses grew sharply in 2017, their other revenues grew even faster. Three of the largest outstate systems had margins of 10% or more: McLaren Health Care (10.6%), Trinity Health (17.2%) and University of Michigan Health, including MetroHealth in Kent County and the five Mid-Michigan hospitals (10%).

    • inpatient hospital days increased slightly for Detroit area hospitals for 2017 but are still 10% less than at their peak in 2007. In 2007, Detroit-area hospitals provided 2.5 million days of inpatient care, but that number has declined almost every year since. The number of inpatient days covered by Medicaid has increased since 2014 when Michigan expanded Medicaid eligibility to more than 600,000 single adults without children. In 2017, Medicare and Medicaid paid for 79.1% of inpatient days in Detroit-area hospitals.
    • 21 Michigan provider organizations have contracted with Medicare Accountable Care Organization program, and 11 of them earned shared savings. In 2017, Michigan ACOs had a total of 511,000 enrolled beneficiaries and earned shared savings of $69.5 million.
    • Enrollment in HMOs increased slightly in the first three quarters of 2018. Michigan HMOs added 6,000 enrollees, and Blue Cross Blue Shield Mutual added 38,000 enrollees. Health plan profitability was much improved in 2018. HMOs had net income of $410 million in the first nine months of 2018 compared to $313 million in the same period a year earlier. Blue Cross Blue Shield improved its net income from $357.2 million in the first three quarters of 2017 to $648 million in 2018.

                Part One of Michigan Health Market Review 2019 will be released in June. The 2019 report will be the 23rd annual edition of our Michigan market analysis, which we first published in 1997.

HMOs at a Glance

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Exhibit 1Click to View

Data Set Summary
Report Contents

Part One
INTRODUCTION         3
Market Structure      4
Health Plans 4
Provider Systems 8
Trend Review 9
Health Plan Enrollment 9
Medicaid Managed Care  12
Medicare Plans 13
Net Income  14
Financial Results by Line of Business 17
Provider Payments  21
Health Plan Capital22
A Look Ahead 23

Part Two

Introduction 3
Market Structure  4
Market Analysis 8

Detroit Area Hospitals  8
Revenues and Net Income  10
Inpatient Occupancy and Payer Mix 12
Performance Bonuses and Penalties 14
Other Major Hospitals 16
Revenues and Net Income  16
Inpatient Occupancy and Payer Mix 16
Performance Bonuses and Penalties . 21
Health Plan Trends 21
HMOs Hospital Admissions  23
Health Plan Enrollment and Net Income 24
Medicaid Enrollment by Region  25
Effectiveness and Utilization of Care  26
A Look Ahead 28

Media Coverage/Presentations

Michigan Health Market Review 2018Part One to be released April 25. Get pre-publication special pricing and read Jay Greene's pre-publication reporting: 

  • Jay Greene wrote in Crain's Detroit Business: "Health plan enrollment, profits hit record highs." Click here to view


Michigan Health Market Review 2017, Part Two,  released February 27, 2018: "Detroit hospitals increase operating income by more than $100 million; Michigan health systems continue growth, consolidation and partnership strategies; Increased HMO enrollment boosts 2017 profits"

  • Jay Greene wrote in Crain's Detroit Business: "Hospitals, health plans posted strong margins for 2016-17, but future could be rougher" Click here to view​​

Michigan Health Market Review 2017Part One released July 19: "Medicaid plans add members but profits drop sharply; HMOs and insurers post large losses on individual plans"

  • Jay Greene wrote: "Michigan health plan profits drop in 2016 by 8% but enrollment up 5%." Click here to view​

Michigan Health Market Review 2016, Part Two,  released May 8, 2017: "Medicaid expansion helps Michigan health systems to best net income; HMO enrollment grows in Medicaid, Individual and Medicare plans"

  • Karen Bouffard wrote in the Detroit News: "Beaumont, DMC posted strongest profits ever in 2015." Click here to view
  • Jay Greene wrote in Crain's Detroit Business: "Report: Michigan hospitals, health plans post slightly lower, but still strong, profit margins in 2015" Click here to view​​

Michigan Health Market Review 2016, Part One released July 27: "Medicaid Expansions Adds 183,000 HMO Members in 2015 and 2016, Increases HMO Profits

  • Jay Greene wrote in Crain's Detroit Business: "Michigan health insurers post near-record profits in 2015." Click here to view
  • Karen Bouffard wrote in the Detroit News: "Michigan Medicaid HMOs earn highest profits in decade." Click here to view​​
  • Mark Sanchez wrote in MiBiz: "In first full year of under state Medicaid expansion, HMO underwriting income spikes 83 percent." Click here to read
  • JC Reindl wrote in the Detroit Free Press: "Affordabe Care Act rates may jump 17.3% in Michigan." Click here to read
  • Sarah Hulett reported for Michigan Radio: "Insurers asking for average 17% rate increase for individual plans." Click here for her report

Michigan Health Market Review 2015, Part Two,  released March 7, 2016: "Consolidated Michigan hospitals report higher profits even as inpatient days are flat; Enrollment in health plan surges but profits drop"

  • Jay Greene wrote in Crain's Detroit Business: "Michigan hospitals post impressive profit margins" Click here to view


Michigan Health Market Review 2015, Part One,  released August 12: "HMO Enrollment Grows Sharply; Medicaid HMOs Add Members and Improve Profits."

  • Karen Bouffard wrote in the Detroit News: "Enrollment up in Michigan Medicaid HMOs, individual plans
  • Jay Greene wrote in Crain's Detroit Business: "Operating income of Michigan Medicaid HMOs rises 295% in 2014"