Michigan

Friday, August 26, 2022

Contact: Allan Baumgarten                Cell: 952/212-8589

Email: [email protected] Twitter: @AllanBaumgarten

 

Michigan Health Market Review 2022 Finds:

In second year of COVID-19, HMO profits tumble from record levels,

as enrollment continues to grow

 

After posting record profits in 2020, Michigan HMOs saw their profits fall sharply as health care utilization and medical claims began to return to pre-COVID levels. Enrollment in Medicaid and Medicare plans continued to grow through the first quarter of 2022.

These findings and others are presented in Part One of Allan Baumgarten’s Michigan Health Market Review 2022, released today. This is the 26^th annual edition of the report, which he first published in 1997. Baumgarten, an analyst based in Minneapolis, examines financial metrics and enrollment trends in Michigan and five other states and weaves that data together with insights about competitive strategies in the market. The Part Two report for Michigan, out later this year, will focus on the financial performance, inpatient utilization and competitive strategies of the hospital systems in the state. Key findings in the new report:

• Michigan HMOs reported net income of $44.1 million in 2021, 92% less than in 2020, when HMOs had record-breaking profits. In 2020, HMOs had combined net income of $551.2 million, as utilization and medical claims fell well below projections. While most HMOs remained profitable in 2021, two large HMOs, Blue Care Network and Health Alliance Plan, reported combined losses of $210 million. UnitedHealthcare Community Plan and McLaren Health Plans both improved their profits in 2021. Priority Health, now including the Total Health Care HMOs, was strongly profitable, as was Molina Healthcare. Blue Cross Blue Shield of Michigan had net income of $301.8 million in 2021, down from $315.5 million in 2020.
• Medicaid HMO plans were the most profitable, reporting underwriting (before investment revenue and taxes income of $279.8 million, up almost 50% from 2020. Four of them had underwriting margins of 7% or higher: McLaren Health Plan, Priority Health Choice, Total Health Care and Upper Peninsula Health Plan. Medicare Advantage plans, which have generally been strongly profitable, reported combined losses of $159.6 million, a major swing from underwriting income of $200.6 million in 2020. Blue Cross Blue Shield and three HMOs--Blue Care Network, Health Alliance Plan and Humana Medical Plan--had large losses on their Medicare Advantage plans, while Molina Healthcare and UnitedHealthcare Community Plan had strong profits. And after excellent profits on commercial plans (individual and employer groups) in 2020, Michigan HMOs saw their underwriting income drop from $136.1 million to a loss of $234.1 million. Three HMOs—Blue Care Network, Health Alliance Plan and Priority Health—had combined losses of $232.1 million.
• Enrollment in Michigan HMOs has grown by more than a half million since the beginning of the COVID-19 pandemic, with Medicaid and Medicare Advantage plans enjoying the largest gains. Enrollment grew by 540,000 between the end of 2019 and the end of 2021. Medicaid plans alone added 437,000 members, while Medicare Advantage HMO grew by 121,000. As of the beginning of 2022, more than half of Michigan Medicare beneficiaries are in a private health plan. Priority Health has the largest Medicare HMO enrollment here, while Meridian, now owned by Centene, is the largest Medicaid HMO.
• Some growth in Medicaid plans occurred because states could not require reverification of eligibility during the public health emergency, which is now extended into 2023. It is possible that a few hundred thousand Medicaid enrollees will lose their benefits then, although many may be able to get low-cost benefits as individuals at Healthcare.gov
• Competition in the Michigan health insurance market could be strongly affected by two developments. First, the state will likely begin a new procurement process for Medicaid HMOs in 2023, and the competition for these large contracts will be fierce, with incumbents and new entrants trying to get a piece of these billion-dollar contracts. Michigan used its last procurement to focus on progress toward key goals in the Medicaid program. Second, a settlement has been approved in an antitrust case brought against the Blue Cross Blue Shield Association and its member plans. Some Association rules that limited competition will be loosened and Blue Cross Blue Shield of Michigan could bid on employer groups in other states. At the same time, other Blue Cross plans can now bid on business in Michigan.

Excerpts from the report, including the useful "Michigan HMOs at a Glance" page can be viewed at https://allanbaumgarten.com/. A subscription to Michigan Health Market Review 2022, including Parts One and Two, can be ordered online at https://allanbaumgarten.com/product-category/michigan/ Or call 952/212-8589; E-mail address: [email protected]

Wednesday, May 4, 2022

Contact Allan Baumgarten, 952-212-8589

 

Michigan Health Market Review 2021, Part Two finds:

Revenues and inpatient days dropped sharply for Detroit-area hospitals in 2020,

but they were still profitable;

Health insurers added members in 2021 but saw higher medical claims and lower profits

 

            In 2020, the first year of the COVID-19 pandemic, Detroit-area hospitals saw their patient care revenues drop by more than $1.1 billion and their inpatient days by 4.9%. But they benefitted from $975 million in Provider Relief funds under the CARES Act and were profitable. Michigan health insurers profited from lower claims and higher enrollment in 2020, but saw their medical claims increase and profits decline in the first three quarters of 2021.

            These and other findings are reported in Part Two of Michigan Health Market Review 2021, released today. The report is published by Allan Baumgarten, a Minneapolis-based analyst who currently publishes market reports in Michigan and five other states. This is the 25^th annual edition of the Michigan analysis, and Part One of a new report for 2022 will be released in July. According to Baumgarten’s report:

• Detroit-area hospitals lost about $1.1 billion on patient care in 2020, as their revenues dropped by $1.13 billion or 9.9%. But they also collected $1.623 billion in other revenues, including $975 million in Provider Relief funds. In 2020, these hospitals had net income of $478.8 million, or 4% of net patient revenues of $12.068 billion. The Ascension hospitals and the Tenet Detroit Medical Center hospitals improved their results compared to 2019. Of the systems in the region, only the Henry Ford hospitals reported a loss, even after collecting other revenues of $505 million.
• Inpatient days for those hospitals dropped by 4.9%, to 2.122 million, their lowest level in the past 15 years. At the Beaumont Health hospitals, inpatient days dropped by almost 10% in 2020, while inpatient days grew slightly at the Ascension hospitals in the region.
• Average margins for hospitals in other parts of Michigan dropped from 6.8% in 2019 to 2.7% in 2020. They had a combined operating loss of $1.491 billion, offset by other revenues of $2.174 billion, including $464.3 million in Provider Relief funds. Health systems like Spectrum Health (which merged with Beaumont Health in 2022), Bronson Health and Munson Health, reported improved profits compared to 2019. Net income for Spectrum Health hospitals grew from $181.6 million in 2019 to $249.4 million in 2020. The University of Michigan hospitals, and the Ascension Health and Trinity Health hospitals outside the Detroit area, all reported losses in 2020. Inpatient days and inpatient occupancy rates also dropped for these hospitals.
• Enrollment in Michigan HMOs increased by 5.8% in the first nine months of 2021. Medicaid HMOs grew by 7%, or 144,000 members, after adding 289,000 members in 2020. In 2021, Blue Cross Complete added 31,000 Medicaid enrollees and Meridian Health, now part of Centene, added 23,000. The Medicaid HMO market here has consolidated, with Priority Health acquiring the Total Health HMOs and Henry Ford Health Alliance Plan buying Trusted Health Plan.
• Medical loss ratios for Michigan HMOs increased from 80.3% in the first nine months of 2020 to 86.3% in 2021. Profit margins decreased from 4.6% to 1.6%. During the first year of the pandemic, Michigan HMOs received fewer claims and improved their profits, as hospitals suspended non-emergent surgeries and patients deferred primary care and hospital care.

            Excerpts from the report and subscription information are available at www.AllanBaumgarten.com Part One of Michigan Health Market Review 2022 is scheduled for release in July and will analyze a full year of financial results for Michigan health plans. The 2022 report will be the 26th annual edition of our Michigan market analysis, first published in 1997.

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Michigan HMOs at a Glance

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Ascension St. John Providence Health System

Blue Cross Blue Shield of Michigan

Greater Detroit Area Health Council

Henry Ford Health System (Health Alliance Plan)

Michigan Association of Health Plans

Michigan Center for Rural Health

Michigan Department of Health and Human Services

Michigan Health and Hospital Association

Michigan Department  of Financial and Insurance Services

Michigan State Medical Society

Michigan State University College of Human Medicine

Spectrum Health System, Grand Rapids

Trinity Health Services

University of Michigan Medical Center

For links to the web sites of several dozen Michigan hospitals, go to:
http://www.mha.org/about/hospitals.htm

Part One

Introduction		3
Market Structure		4
Health Plans		4
Provider Systems		8
Trend Review		8
Health Plan Enrollment		8
Individual Plans and the Marketplace		10
Medicaid Managed Care		10
Medicare Plans		12
Health Plan Revenues and Income		13
Financial Results by Line of Business		15
Provider Payments		21
Administrative Expenses		22
Health Plan Capital		23
A Look Ahead		25

 

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Part Two

Introduction		5
Michigan Hospitals and Health Systems		6
Detroit Area Hospitals		9
Revenues and Net Income		11
Inpatient Occupancy and Payer Mix		13
Performance Bonuses and Penalties		15
Other Major Michigan Hospitals and Systems		16
Revenues and Net Income		17
Inpatient Occupancy and Payer Mix		19
Performance Bonuses and Penalties		21
Health Plan Trends		24
Hospital Discharges by HMO and System		24
Health Plan Enrollment and Finances in 2021		24
A Look Ahead		27

MICHIGAN HEALTH MARKET REVIEW 2020, PART ONE,  RELEASED JULY 16, 2020: “SUPERSIZE INVESTMENT REVENUES BOOST MICHIGAN HEALTH PLANS TO RECORD PROFITS IN 2019; ENROLLMENT IN MEDICARE PLANS GROWS BY 15%”

Michigan Health Market Review 2018, Part 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 2017, Part 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"