Revenue grows but membership declines

2007 forecast

In 2007, revenues for health insurers will continue growing, but enrollment will probably decline, according to a report issued by Corporate Research Group, a market research organization specializing in health care. Potential sources of growth for the industry include consumer-directed health care, which is expected to account for 15 percent to 20 percent of health plan enrollment by the year 2010, more product diversification, including ancillary businesses that broaden product lines and create new revenue opportunities, consolidation, and Medicare. The Medicare Advantage market has rebounded since 2004, when enrollment rose 1.9 percent. The resurgence continued in 2005, with enrollment climbing by 10.2 percent. Medicare Advantage health plans will receive an increase of 4.8 percent per plan enrollee in 2006. That follows a 6.6 percent hike in 2005.

When the accounting books have closed for 2006, the managed care industry is projected to report increased revenue of 9.1 percent, to a total of $287 billion. At the same time, profit margins will have expanded 5.8 percent, up from 5.5 percent in 2005. In addition, fully funded HMO and POS membership will continue to decline, but at a slower rate, dropping 0.1 percent in 2006, compared to 0.4 percent in 2005.

To purchase the 2007 edition of the Outlook for Managed Care Report, please contact Reena Joseph, Corporate Research Group, at 914-235-6000.

Forecast managed care industry percentage growth, 2005-2008

Forecast managed care industry revenue and profit growth, 2005-2008 ($ in millions)

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