Managed Care

 

Insurers to Face Financial Challenges

MANAGED CARE February 2008. © MediMedia USA
News and Commentary

Insurers to Face Financial Challenges

MANAGED CARE February 2008. ©MediMedia USA

Insurers have maintained strong earnings in recent years — much to the delight of stockholders — because of relatively stable expenses, improved case management, and new technology. However, a report by A.M. Best Company, a global credit rating organization, suggests that insurers will need to navigate a challenging financial landscape in 2008.

According to “Health Insurers’ Financial Results Will Be Tested as Markets Evolve,” health plans involved in Medicare and Medicaid may experience higher medical loss ratios overall because more, and more expensive, claims are being filed.

In addition, not-for-profit Blue Cross & Blue Shield companies may see a dip in revenue because these companies generate earnings through income, rather than underwriting gains.

The industry may also draw attention from Congress, particularly companies that are involved with Medicare Advantage programs, which have contributed to enrollment growth.

The report suggests that payment rates, particularly for private fee-for-service plans, may draw closer scrutiny from the federal government.

A.M. Best expects underwriting margins for provider-owned and -affiliated health plans to remain stable at 2.3 percent for the first nine months of 2007. This was the same rate as 2006’s full-year result. Historically, underwriting margins had been declining from as high as 2.8 percent in 2003 to 2.6 percent in 2004, before falling to 2.1 percent in 2005. Provider-owned and -affiliated health plans may also face pressure on medical loss ratios because of competition and higher costs as plans increase expenses related to sales, marketing, and commissions to defend their existing accounts and to expand their business.

And as in other election years, proposals by presidential candidates to reform health care, including Medicare expansion, granting states flexibility to develop coverage mandates, and tax credits to pay for expenses, will make 2008 an interesting year for the industry.

Meetings

Pharmaceutical Pricing and Contracting Conference Philadelphia, PA September 22–23, 2014
Private Health Insurance Exchanges Conference Washington, D.C. October 7–8, 2014
National Healthcare Facility Management Summit Palm Beach, FL October 16–17, 2014
National Healthcare CFO Summit Las Vegas, NV October 19–21, 2014
National Healthcare CXO Summit Las Vegas, NV October 19–21, 2014
Innovative Member Engagement Operations For Health Plans Las Vegas, NV October 20–21, 2014
4th Partnering With ACOs Summit Los Angeles, CA October 27–28, 2014
2014 Annual HEDIS® and Star Ratings Symposium Nashville, TN November 3–4, 2014
PCMH & Shared Savings ACO Leadership Summit Nashville, TN November 3–4, 2014
World Orphan Drug Congress Europe 2014 Brussels, Belgium November 12–14, 2014
Medicare Risk Adjustment, Revenue Management, & Star Ratings Fort Lauderdale, FL November 12–14, 2014
Healthcare Chief Medical Officer Forum Alexandria, VA November 13–14, 2014
Home Care Leadership Summit Atlanta, GA November 17–18, 2014