Standard & Poor's expects the health insurance industry sector to continue to improve its credit rating in the second half of the year, according to its report "Rosy Midyear Outlook for U.S. Health Insurance in 2005."

This healthy glow can be attributed to a variety of factors, according to Shellie Stoddard, a credit analyst at S&P. They include stable pricing, as reflected in the industry's reported earnings. "That and a favorable regulatory and political environment going forward," says Stoddard, "make for a sustainable, positive outlook."

S&P looked at 41 groups of companies with financial strength ratings. More than half the companies have an 'A' rating, the third highest rating a company can receive, and are more likely to be affected by adverse business conditions than insurers with 'AA' or 'AAA' ratings.

Ratings were raised for Kaiser Foundation Health Plan, California Physicians Service (Blue Shield of California), Sierra Health Services, Group Health Cooperative, ConnectiCare, and Health Care Service Corp. Only Health Net was downgraded.

The report also addresses the potential effect of the Medicare Modernization Act of 2003 on this sector. Managed Medicare is the only significant growth market for health insurers. "That is brand new revenue for these insurers," says Stoddard.

"I'm having a greater appreciation for the dual eligibles — that's six million potential members who can be enrolled on Jan. 1, 2006," continues Stoddard. Dual eligibles are people who will be eligible for both Medicare and Medicaid benefits under the MMA. They had been receiving benefits under Medicaid, but will now be able to receive Medicare prescription drug benefits as well.

Credit ratings improved between May 2002 and May 2005 for companies rated 'A' and 'BBB'More stability and fewer negative ratings in May 2005, compared to May 2004Source: Standard & Poor's

Note: CreditWatch is a signal to users of S&P's ratings system that there will be a change, either positive or negative, to a sector or industry.

Source: Standard & Poor's

Note: Percentages refer to the 41 groups in the sector.

Managed Care’s Top Ten Articles of 2016

There’s a lot more going on in health care than mergers (Aetna-Humana, Anthem-Cigna) creating huge players. Hundreds of insurers operate in 50 different states. Self-insured employers, ACA public exchanges, Medicare Advantage, and Medicaid managed care plans crowd an increasingly complex market.

Major health care players are determined to make health information exchanges (HIEs) work. The push toward value-based payment alone almost guarantees that HIEs will be tweaked, poked, prodded, and overhauled until they deliver on their promise. The goal: straight talk from and among tech systems.

They bring a different mindset. They’re willing to work in teams and focus on the sort of evidence-based medicine that can guide health care’s transformation into a system based on value. One question: How well will this new generation of data-driven MDs deal with patients?

The surge of new MS treatments have been for the relapsing-remitting form of the disease. There’s hope for sufferers of a different form of MS. By homing in on CD20-positive B cells, ocrelizumab is able to knock them out and other aberrant B cells circulating in the bloodstream.

A flood of tests have insurers ramping up prior authorization and utilization review. Information overload is a problem. As doctors struggle to keep up, health plans need to get ahead of the development of the technology in order to successfully manage genetic testing appropriately.

Having the data is one thing. Knowing how to use it is another. Applying its computational power to the data, a company called RowdMap puts providers into high-, medium-, and low-value buckets compared with peers in their markets, using specific benchmarks to show why outliers differ from the norm.
Competition among manufacturers, industry consolidation, and capitalization on me-too drugs are cranking up generic and branded drug prices. This increase has compelled PBMs, health plan sponsors, and retail pharmacies to find novel ways to turn a profit, often at the expense of the consumer.
The development of recombinant DNA and other technologies has added a new dimension to care. These medications have revolutionized the treatment of rheumatoid arthritis and many of the other 80 or so autoimmune diseases. But they can be budget busters and have a tricky side effect profile.

Shelley Slade
Vogel, Slade & Goldstein

Hub programs have emerged as a profitable new line of business in the sales and distribution side of the pharmaceutical industry that has got more than its fair share of wheeling and dealing. But they spell trouble if they spark collusion, threaten patients, or waste federal dollars.

More companies are self-insuring—and it’s not just large employers that are striking out on their own. The percentage of employers who fully self-insure increased by 44% in 1999 to 63% in 2015. Self-insurance may give employers more control over benefit packages, and stop-loss protects them against uncapped liability.