Michigan

Monday, November 13, 2023

Contact: Allan Baumgarten                Cell: 952/212-8589

Email: Baumg010@umn.edu Twitter: @AllanBaumgarten

 

Michigan Health Market Review 2023 Finds:

HMO Enrollment Passes Four Million,

Profitability Improves in 2022 and 2023

 

Driven by growth in Medicaid and Medicare plans, enrollment in Michigan HMOs grew by 4.1% in 2022, surpassing the four-million mark for the first time ever. After a sharp drop in profitability in 2021, net income increased in 2022 and again in the first half of 2023.

These findings and others are presented in Part One of Allan Baumgarten’s Michigan Health Market Review 2023, released today. First published in 1997, this is the 27^th annual edition of the report. Baumgarten, a Minneapolis-based analyst, examines financial measures, enrollment trends and competitive strategies for health insurers and hospital systems in Michigan and five other states. The Part Two report for Michigan, to be released later this year, will analyze 2022 data on the financial performance, inpatient utilization and competitive strategies of the hospital systems in the state.

Key findings in the new report:

• Net income for Michigan HMOs grew from $44.1 million in 2021 to $542 million, or 2.3% of revenues of $23.352 billion in 2022. In the first half of 2023, HMOs improved their margins to 3.7% of revenues. In 2022, HMOs had net income of $542 million, almost as much as their record setting profits of $551.2 million in 2020. Five HMO companies--Health Alliance Plan, McLaren Health Plans, Meridian Health (a Centene company), Priority Health and UnitedHealthcare Community Plan—had margins above 3%. Blue Cross Blue Shield Mutual of Michigan, the largest insurer in the state, reported a loss of $269.3 million in 2022, but had net income of $41.2 million in the first half of 2023.
• Some of the most profitable HMOs are those that contract with the state to serve Medicaid enrollees. Profits for Medicaid HMOs are strong, although they fell from $279.8 million in 2021 to $230.3 million in 2022, and their margins fell from 3.4% to 2.8%. In the last three years, Medicaid HMO plans had combined underwriting income of $692 million.
• Medicaid enrollment has grown by 275,000 lives since the end of 2020, reaching 2.3 million in June 2023. Michigan has started the procurement process to select Medicaid HMO plans for new contracts starting in the fall of 2024. These contracts are a huge business opportunity; they are worth more than $8 billion a year, and the competition to get or keep and expand contracts will be fierce. Michigan sets high expectations for those health plans, requiring them to take steps to improve the health of their enrollees.
• Medicare Advantage plans were very profitable in 2020 but reported large losses in both 2021 and 2022. Enrollment has grown by 15% in the last two years, and about 58% of the state’s 2.18 million Medicare beneficiaries are now in a Medicare Advantage plan.
• Enrollment in Michigan HMOs has grown by 703,000 (20.6%) since the beginning of the COVID-19 pandemic in 2020, with Medicaid and Medicare Advantage plans enjoying the largest gains. Meridian Health Plan, now owned by Centene, has the largest Medicaid plan, and Priority Health is the largest Medicare Advantage HMO. Blue Cross Blue Shield Mutual has the largest Medicare PPO enrollment in the state.
• Some growth in Medicaid enrollment occurred because states could not require reverification of eligibility during the public health emergency, which ended in May 2023. As of August 2023, the state had completed reverifications of eligibility for about one-third of Medicaid recipients, and about 47,000 were found to be ineligible and about 224,000 others lost benefits, mostly because they failed to complete or return the information requested by the state.

Excerpts from the report, including the "Michigan HMOs at a Glance" page can be viewed at https://allanbaumgarten.com/. A subscription to Michigan Health Market Review 2023, including Parts One and Two, can be ordered online at https://allanbaumgarten.com/product-category/michigan/ Or call 952/212-8589; E-mail address: Baumg010@umn.edu

 

Michigan Health Market Review 2022, Part Two:

Key Findings

 

 Our analysis here is based on Medicare cost report data for 2021 hospital operations.

Southeast Michigan Hospitals:

• Combined net income for these hospitals dropped from $478.8 million in 2020 to $282.7 million in 2021, and margins dropped from 4.0% to 2.1%. Patient care revenues increased faster than expenses, and these hospitals saw their patient care losses decrease from $1.092 billion in 2020 to $387 million in 2021. However, their other revenues, including investments, philanthropy and government grants, including the Provider Relief Funds, dropped from $1.623 billion to $755.6 million. Hospitals reported receiving $110.4 million in 2021, down from $975 million in 2020.

 

• Beaumont Health, the eastern division of what is now called Corewell Health, had the highest net income at $194.5 million, or 4.7% of patient revenues. The Henry Ford hospitals reported a loss of $218.5 million, while the Ascension hospitals here reported a loss of $16.3 million. The McLaren hospitals and the Tenet Detroit Medical Center hospitals were both profitable in 2021.

 

• After dropping by 4.9% in 2020, inpatient days increased by 3.4% in 2021, and average inpatient occupancy increased from 64.7% to 68.0%. Medicaid covered 26.1% of inpatient days in 2021, which was 28,000 more days than in 2020.

 

Other Michigan Hospitals

 

Our analysis of financial and enrollment data from 63 hospitals in 10 large systems plus five others.

 

• These hospitals had net income of $2.952 billion in 2021, or 13.7% of their net patient revenues. That is almost six times as much as in 2020, when they had net income of $513 million. They lost $326.7 million on patient care in 2021 but had $3.398 billion in other revenues, including $634.4 million in Provider Relief Funds.
• The University of Michigan Health system, including the MyMichigan hospitals, had net income of $889.8 million in 2021, up from a loss of $57.9 million in 2020. The Ascension hospitals in this group had net income of $90.6 million, while the McLaren Health hospitals reported net income of $244 million.
• After dropping by 4.3% in 2020, inpatient days for these hospitals increased by 6.3% in 2021. Average inpatient occupancy rate increased from 59% in 2020 to 63% in 2021.
• 13 of the hospitals in this group received five-star ratings from Medicare for 2023.

 

            Excerpts from the report and subscription information are available at www.AllanBaumgarten.com Michigan Health Market Review 2023 will be released later this year. The 2023 report will be the 27th annual edition of our Michigan market analysis, first published in 1997.

Friday, August 26, 2022

Contact: Allan Baumgarten                Cell: 952/212-8589

Email: Baumg010@umn.edu 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: Baumg010@umn.edu

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

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"