As the coronavirus epidemic began in the United States in early 2020, there was some uncertainty about how it would affect the financial performance of health insurers. Hospitals, physicians and other healthcare providers canceled alternative procedures to evacuate beds, staff and supplies at the onset of the epidemic and to limit unnecessary risks and infections. Patients also opted to leave non-immediate care to limit the risk and risk of the virus. These dynamics lead to one Unprecedented reduction On health care spending and utilization in the spring of 2020. Although spending appeared in the second half of the year, health spending was slightly lower in 2020 than in 2019, for the first time last year. Record history That health spending in the U.S. has fallen simultaneously, including the economic downturn and consequent job losses could turn into health coverage across many markets, including Normal decreases Through employer-based coverage through September but substantial enrollment increases Medicaid managed care And Medicaid widely. During this period, the pressure on enrollment in Medicare Advantage plans offered by private insurance companies continued.
In this brief, we analyze the latest financial data to test how the insurance market appeared in the epidemic and how it will perform in 2020 as the year progresses. We have been reported by insurance companies to the Insurance Commissioners of Insurance Companies (NAIC) and look through medical deficit ratios and drug benefits, Medicaid managed care, total losses in individual (non-group) and compiled by Mark Farrah Associates. Full insurance group (employer) end of each year health insurance market. Details of each market are included in the appendix.
We found that by the end of 2020 the gross margin per member per month in these four markets was relatively high and the medical loss ratio was relatively low or flat compared to recent years. These findings suggest that many insurance companies will continue to benefit until 2020. According to one Recent KFF analysisCommercial insurers will give consumers substantial discounts this year under the Affordable Care Act (ACA) Medical Deficit Ratio provision. For Medicaid, apply Risk sharing arrangement Locations in many states may eventually reduce the overall margin calculated using annual NAIC data.
One way to assess the insurer’s financial performance is to check the gross margin per member, or the amount that premium income claims more than the enrollment cost per month. Gross margin is an indicator of financial performance, but positive margins do not translate as profit because they do not account for administrative expenses or tax liabilities. However, the sharp increase in margins from one year to the next without a significant increase in administrative costs indicates that these health insurance markets have become more profitable during the epidemic.
Insurers had to cover the full cost of coronavirus testing for enrollees in 2020. (Biden administration has issued Guidance That insurance companies must take the COVID-1 testing test at no enrollment fee. Plus, many insurance companies Voluntarily forgivend Coronavirus treatment and packet costs for sure Telehealth services By the end of 2020. In addition, Medicare Advantage plans may have increased COVID-related hospital payments by 20% due to increased implementation of traditional Medicare, although these additional costs were offset by a temporary discount of 2% during public health emergencies. Sequestration, which otherwise supports Medicare payment plans. Together, insurers have seen their claim costs decline and margins increased relative to 2010 (Figure 1).
By the end of 2020, the gross margin between individual market and full insurance group market plans was %% and 1 %% higher than in 2019-2019, respectively. However, gross margins between full insurance group group market plans remained relatively flat in 2020. Compared to 2018 2018, and the total margin between individual market plans in 20 market2 decreased by 1 14%, the market has been over-improved when individual market insurers set the premium behind the loss of cost-sharing grant payments. The annual gross margin on 20 Medicare Medicare Advantage plans was 224% higher than in 2011 and 1% higher than in 2018. (The total gross margin per member per month for Medicare Advantage plans tends to be higher than other health insurance markets because primarily Medicare covers the sick population with an older, higher average cost).
The annualized monthly margin per member for managed care organizations (MCOs) in the Medicaid market was 45% higher in 2020 and 34% higher than in 2018. Although the margin Medicaid MCO market is lower than other markets because the rates should be realistic, the payment rates at Medicaid are lower than other markets. States can also use a variety of mechanisms to adjust plan risks, promote performance and ensure payments are not too high or low. Different options To modify their capitation rates or to use risk sharing mechanisms. Provides guidance on CMS options To adjust MCO payments during epidemics, as states and schemes cannot properly predict changes in utilization and spending. Many of the states’ adjustments may be retrospectively and may not be reflected in the annual data.
Medical deficit ratio
Another way to assess the insurer’s financial performance is to look at the medical deficit ratio, or the percentage of premium income that insurers pay as a medical claim. Generally, a lower medical deficit ratio means more income is left after insurance companies pay for medical costs to be used for administrative costs or to keep as a profit. Each health insurance market has different administrative requirements and costs, so a low medical loss ratio in one market does not mean that the market is more profitable than another. However, in a given market, if administrative costs remain constant from one year to the next, a decrease in the medical deficit ratio indicates that the plans have become more profitable.
Medical loss ratio is used in different ways in state and federal insurance regulation. In the commercial insurance (individual and group) market, insurers can exempt individuals and businesses if their loss ratio fails to meet the minimum criteria set by the ACA. Medicare benefits are insured Is required To report loss ratio at agreement level; They should also exempt the federal government if their MLRs stand up to the required standards and face additional penalties if they fail to meet the deficit ratio requirements for several consecutive years. For Medicaid MCOs, CMS requires states to develop caption rates for Medicaid to achieve an MLR of at least 85%. Medicaid has no federal requirement to pay remittances if they fail to meet their MLR threshold, but The majority of the state Agreements with MCOs require remittances in at least some cases.
The medical deficit ratio shown in this case differs from the definition within the MLR ACA And CMS Medicaid Care Final Rules Managed, Which makes some adjustments for quality improvement and taxes, and does not account for reinsurance, risk corridors, or risk adjustment payments. Specifically, the health insurance tax, which was permanently repealed in 2021, was effective in 2018 and 2020, but not in 2019-2019. The chart below shows the simple medical loss ratio, or a fraction of the premium income paid by insurers on claims, without any modifications (Figure 2). The annual loss ratio in the Medicare Advantage market has decreased by two percentage points in 2020 compared to 2020 and 2018, and now the minimum required by law is below the minimum 85%, although once deducted from total revenue they may be above the required level. In 2020, the annual deficit ratio in the Medicaid-managed care market fell by 4 percentage points from 201 (and three percentage points from 2018 to 2018), but still met the 85% minimum without accounting for possible adjustments.
The fully-insured group market deficit ratio decreased by 2% from 201 to 2020 and can be compared with the value of 201 2018. The personal market deficit ratio also declined by two percentage points in 2020 compared to last year, but increased by four percentage points compared to 2018. The deficit ratio in the individual market was already quite low, with epidemics in the market and insurance companies expecting more releases. Than अर्ब 2 billion Based on their experience in 201 fall, 201 consumers and 2020, this fall consumers are at a discount. The market has stabilized as insurers in the personal market have been profitable for many consecutive years. Average premium It has decreased in three consecutive years Insurer’s participation ACA exchanges have grown in many parts of the country.
Using the annual financial data reported by insurance companies to NAIC, it appears that most health insurers in the market have made more profit during the epidemic, although we cannot measure profits without administrative cost data. The gross margin we saw in the markets was higher and the medical deficit ratio was lower in 2012 than in 2012. The loss ratio in the Medicaid MCO market was lower in 2012 than in 2012 and 201; Although the gross margin in the Medicaid MCO market is lower than in other markets, the data do not reflect the implementation of existing or newly implemented risk sharing mechanisms.
Medical aid insurers who for many years face additional penalties, including the possibility of ending up in a lower segment of the required loss ratio requirements. To avoid such risks, some Medicare Advantage insurers with a Medic loss ratio of less than 85% may take advantage of new or more generous additional features, such as gym membership and dental or vision benefits that are popular and help attract new recruits. For Medicaid MCOs, as an alternative to modifying payment and risk sharing agreements during an epidemic, plans cannot be left out of the unexpected surplus or fail to reach their state’s MLR limit this year.
Many commercial insurers waive certain fixed-out-of-pocket costs Telehealth tour And COVID-related services or offered Premium leave At some point in 2020, that had the effect of increasing their medical deficit ratio and reducing margins. First Analysis Published in Peterson-Kaiser Health Systems Tracker found that about 90% of enrollments in the individual and full-insurance group market were in a plan that at some point during the epidemic the cost of COVID-1 treatment was shared, and about 0% of those marketers plan Which is proposed to reduce the premium credit to some extent in 2020. In 2021, the ACA medical deficit ratio is expected to reach billions of dollars for the third consecutive year. Individual and group market insurers expect to pay १ 2.1 billion This fall on consumers based on their financial performance in 2020, 2019 and 2018. Most of this interest (estimated at $ 1.0 billion) is borne by individual market insurance companies.
The impact of the epidemic in 2021 on health spending and insurers’ financial performance remains uncertain. Healthcare use is high Rebounded At pre-epidemic levels and there may be an additional paint-up demand for serious forgotten or delayed care. In addition, the cost of the vaccine dose is largely borne by the federal government Administering The shots are often covered by private insurance companies.