Michigan

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Reports

April 25, 2018
Michigan Health Market Review 2018
 Finds:

Led by Blue Cross Blue Shield Companies, 
Michigan Health Plans Report Record Profits and Higher Enrollment
 
(Detroit/Ann Arbor/Lansing) Driven by very strong results for Blue Cross Blue Shield and its HMOs, Michigan health plans reported record high profits in 2017. These findings and others are reported in Part One of Allan Baumgarten’s Michigan Health Market Review 2018, released here today. This is the 22nd edition of his report analyzing Michigan’s health care payer and provider markets. Baumgarten, a Minneapolis-based analyst, also publishes health market reports in seven other states. The Part Two report for Michigan, to be released later this year, will analyze the financial performance, inpatient utilization and competitive strategies of Michigan’s hospital systems, 
Key findings in this new report:
 •          Michigan HMOs recorded their highest profits in history: net income of $452.1 million in 2017, or 2.6% of underwriting revenues. That was 50% higher than their net income in 2016. The Blue Cross Blue Shield HMOs (Blue Care Network and Blue Cross Complete for Medicaid) had combined net income of $257.4 million, or 5.8% of underwriting revenues. Priority Health, which now covers the entire Lower Peninsula and is the second largest HMO, improved its net income to $91.5 million, or a 2.6% margin. 
•           Blue Cross Blue Shield Mutual of Michigan, which had lost $226 million in 2016, enjoyed a swing of nearly half a billion dollars, posting net income of $295.2 million. While it still lost money on its commercial plans, it was very profitable on its Medicare Advantage and Medicare Supplement plans.
•           Premiums grew faster than medical expenses for commercial plans (employer groups and individuals), and HMOs improved underwriting income on those plans from $12 million in 2016 to $203.2 million in 2017. Blue Care Networkreported commercial plan profits of $155.9 million, up from $29.2 million in 2016. 
•           Medicaid plans are now the largest line of business for Michigan HMOs. Though still profitable, their underwriting income fell by 25% in 2017. Underwriting income for Medicaid HMOs fell from $298 million in 2015 to $165.4 million in 2016 and $122.5 million in 2017. Still Molina Healthcare posted a 3.8% margin on its Medicaid business, and Blue Cross Completeand McLaren Health had 2.8% margins on their Medicaid plans. 
•           Enrollment growth for Michigan HMOs slowed in 2017. After increasing by 4.9% in 2016, enrollment in Michigan HMOs grew 1.4% in 2017, reaching 3.4 million. HMO Medicare plans added 36,000 new members, and 42.7% of Medicare enrollees in the state are now in a Medicare Advantage plan, well above the national average. Medicaid plans added almost 23,000 lives, and Meridian Health, Molina Healthcare and UnitedHealthcare Community Plan are the three largest Medicaid plans.
•           After significant growth in 2014, 2015 and 2016, enrollment in individual plans here began to decline in 2017.Individual enrollment grew to 426,000 at the beginning of 2017, but declined during the year to 358,000, most of them in HMOs.Blue Care NetworkBlue Cross Blue Shield and Priority Health are now the largest individual plans here. Premium increases for individual plans for 2018 averaged 27.6%, much higher than in previous years. While some plans have exited that market, some others have expanded their service regions, including Meridian Health and McLaren Health.
Excerpts from the report, including the "Michigan HMOs at a Glance" page can be viewed at www.AllanBaumgarten.com. A subscription to Michigan Health Market Review 2018, including both Parts One and Two, can be ordered online at http://store.allanbaumgarten.com/productlist.php?category=7 Or call 952/925-9121; E-mail address: Baumg010@umn.edu

February 27, 2018
 

Detroit Hospitals Boost Operating Income by More Than $100 Million;

Michigan Heath Systems Continue Growth, Consolidation and Partnership Strategies

Increased HMO Enrollment Boosts 2017 Profits


Benefiting from consolidation and Medicaid expansion, Detroit-area hospitals added $105

million to their operating income in 2016, reporting their highest net income ever. Michigan HMOs

added 54,000 lives in the first nine months of 2017, gaining in key lines of business: individual,

Medicare and Medicaid, and reported strongly improved profits.

These findings and a detailed analysis of the competitive strategies of hospitals and health

systems in the state are found in Part Two of Michigan Health Market Review 2017, released today. The

new report analyzes 2016 data on hospital finances and inpatient utilization for all general acute care

hospitals in the Detroit area and 64 hospitals in other parts of the state. It also presents updated enrollment

growth and profitability data for Michigan health plans through September 2017. Key findings in the

new report:

 For the second year, Detroit area hospitals added more than $100 million to their operating

income in 2016. Based on an analysis of Medicare cost report data for 2016 operations, Detroit hospitals,

now organized into six health systems, had net income of $655.5 million in 2016, which was 5.5% of net

patient revenues of almost $12 billion. That is up more than 20% from 2015 net income of $535.5

million. They improved their operating income from $133.7 million in 2015 to $238.6 million in 2016.

Two large systems reported much improved net income. The Beaumont Health system, now with

32% of the market, improved its net income for the third straight year, from $301.6 million in 2015 to

$360.5 million in 2016. The three McLaren Health hospitals in the area increased their net income from

$19.2 million to $83.3 million.

• Net income for hospitals in other parts of the state increased by 32.3% in 2016. Based on

data for 64 hospitals outside the Detroit area, they increased their combined net income by 32.3% in 2016,

from $845.5 million to $1.104 billion. While they lost money on operations, they increased their other

revenues from investments, philanthropy and government grants by $211 million. The systems with the

best margins were: Spectrum (9.1%), Munson (9.0%), Trinity Health (6.8%) and University of

Michigan (6.5%).

 Continuing a trend beginning in 2007, inpatient hospital days fell 2.6% for Detroit area

hospitals. Inpatient days peaked at about 2.5 million in 2007 and has declined almost every year since.

The number of inpatient days covered by Medicaid increased in 2014 and 2015, as Michigan and more

than 680,000 residents now have Medicaid coverage through the Healthy Michigan program.

• Ten out of 16 Michigan provider organizations earned shared savings in the Medicare

Accountable Care Organization program. Combined they earned $62 million, almost twice as much as

the year before. Three Michigan provider systems- Michigan Pioneer ACO, Henry Ford Physicians

Network and Trinity Health- have contracted with Medicare as Next Generation Accountable Care

Organizations.

• Enrollment in HMOs increased by about 54,000 or 1.6% in the first three quarters of 2017.

Medicare Advantage plans added 28,000 seniors, while individual plans added 28,000 new enrollees and

Medicaid plans grew by 23,500.

• HMO profits grew sharply in the first three quarters of 2017. HMOs reported total unaudited

net income of $312.9 million, up from $253.3 million for the same period in 2016. Both Blue Cross Blue

Shield Mutual and its HMO, Blue Care Network, reported much improved profitability in 2017.

Blue Care Network had net income of $155.1 million for the first nine months of 2017, up from $93.7

million a year earlier. Its parent, Blue Cross Blue Shield Mutual, improved its nine-month net income

from a loss of $62 million to net income of $357.2 million.

Part One of Michigan Health Market Review 2018 will be released in June. The 2018 report will

be the 22nd annual edition of our Michigan market analysis, which we first published in 1997.


July 19, 2017

Michigan Health Market Review 2017 Finds:
Medicaid plans add members, but profits drop sharply;
HMOs and insurers post large losses on individual plans

 
(Detroit/Ann Arbor/Grand Rapids) Michigan health plans saw their profits drop in 2016 even as they added enrollees in all lines of business. These findings and others are reported in Part One of Allan Baumgarten’s Michigan Health Market Review 2017, released here today. This is the 21st edition of the report that Baumgarten, an independent analyst based in Minneapolis, has published since 1997 examining Michigan’s health care payer and provider markets. The Part Two report, to be released later this year, analyzes the financial performance, inpatient utilization and competitive strategies of the state’s hospital systems based on 2016 data. Baumgarten will also publish market reports in 2017 for Minnesota, Colorado, Florida, Ohio and Wisconsin.

Key findings in this new report include:

 •          Enrollment in Medicaid HMOs grew by 132,000 (7.5%) in 2016, and 29,000 more in the first quarter of 2017.Enrollment in the Healthy Michigan expansion of Medicaid has grown to 680,000. Medicaid has been the largest line of business for Michigan HMOs since 2012.
•           Medicaid plans had underwriting income of $165.4 million in 2016, down 44.5% from $298 million in 2015. Their average margin decreased from 3.9% to 2.0%. Average medical expenses increased more than twice as fast (4.6%) as premium revenues (2.1%). Still, three HMOs – Molina Healthcare, UnitedHealthcare Community Plan and Meridian Health Plan – had Medicaid underwriting income of $35 million or more. 
•           Enrollment in individual plans, both HMO and PPO, increased in the first quarter of 2017 by 31,000 (8%), but insurers lost $111 million in 2016 on individual plans. Priority Health lost $39.6 million and Blue Cross Blue Shield lost $50.2 million. By comparison, Michigan health plans lost about $4 million on individual plans in 2015. Since 2013, the Michigan market for individual plans has been relatively stable, with a good number of competitors and relatively modest annual premium increases. Proposed premium increases for 2018 are much higher, because of losses and because of uncertainty over government subsidies.
•           Michigan HMOs had higher underwriting income on Medicare plans in 2016, with both Blue Care Network andPriority Health reporting strong profits. 
 •          Blue Cross Blue Shield Mutual, the state’s largest insurer, reported a loss of $226.1 million in 2016, less than a loss of $344.3 million in 2015. Its losses on individual and group business were higher, but its results on its Medicare Advantage plans were much improved. 
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 2017, including both Parts One and Two, can be ordered online at http://store.allanbaumgarten.com/productlist.php?category=7 Or call 952/925-9121; E-mail address: Baumg010@umn.edu

HMOs at a Glance
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"