Michigan Managed Care Review 2006 Finds: Softness in Michigan Economy Challenges Health Organizations
Posted on: Monday, 17 July 2006, 15:00 CDT
DETROIT, ANN ARBOR and TRAVERSE CITY, Mich., July 17 /PRNewswire/ -- Bankruptcies, construction inflation and deep cuts in employment and health benefits by key Michigan employers pose major challenge to providers and health plans in the state. Michigan HMOs reported their most profitable year ever, but health plans and employers alike are moving away from the HMO model to benefit plans that allow more consumer cost-sharing. Medicaid HMOs, including national investor-owned companies, are now among the largest health plans in the market.
These and other findings on the finances and enrollment trends of Michigan's managed care companies are included in Part One of Michigan Managed Care Review 2006, Allan Baumgarten's tenth annual report analyzing key trends and issues in the Michigan health care market. The new report was released today in southeast Michigan and in Traverse City at the annual meeting of the Michigan Association of Health Plans. In Part Two of the 2006 report, to be released later this year, he will analyze hospital performance, purchaser initiatives and other developments in the market and compare HMOs on utilization and quality measures.
Baumgarten, based in Minnesota, is an independent research analyst and consultant on health care policy and finance. In 2006 he will also publish annual reports analyzing health care markets in Michigan and eight other key states: California, Colorado, Florida, Illinois, Minnesota, Ohio, Texas, and Wisconsin. GlaxoSmithKline has provided sponsorship support for the Michigan report since 1997.
In this new analysis, Baumgarten reports: -- Despite uncertainty, providers are embarking on major investments in new hospitals and other capital projects. New hospitals are under construction at a time of high inflation for construction materials and uncertainty about the flow of patients and cash needed to fill and finance those new hospitals. -- Michigan HMOs had net income of $271.1 million in 2005, or 3.7% of underwriting revenues of $7.4 billion. In addition to $204 million of net income on operations, they also had investment income of $65 million. That compares to net income of $262.2 million in 2004 and $200.7 million in net income in 2003. -- In 2005, Medicaid plans had net income of $60.8 million. They had net underwriting income of $53.3 million in 2004, benefiting from increased payment rates and increased federal funding. Three of the largest Medicaid HMOs in the state are national, investor-owned companies: Molina Healthcare, Great Lakes Health Plan (bought by UnitedHealthGroup) and OmniCare (Coventry Health). -- As enrollment in commercial HMO plans continues to decline, Medicaid HMO enrollment has grown and is now more than one-third of the state's HMO membership. Medicaid HMOs added 13,000 lives in 2005, and now enroll about 33% of all HMO enrollees. Some of the major employers in the state, working through bankruptcy or trying to restore profitability, have negotiated or imposed benefit cuts. Enrollment in commercial plans dropped for the fifth straight year as employers and health plans migrated to PPOs and other arrangements that allow more enrollee cost-sharing. -- Medicare HMOs reported a small enrollment increase after years of decline. Senior penetration is still low in the state and it remains to be seen if the Medicare HMO growth occurring in other states will occur in Michigan. -- On average, premium revenues in HMO commercial (employer-sponsored) plans increased by 5.1% last year, from $234.62 to $246.57. That is the lowest increase since the 1990s -- the state's employers paid double-digit increases in the previous four years. Premium revenues increased by an average of 11.1% in 2004, 9.5% in 2003, 15.9% in 2002 and 11.6% in 2001.
Excerpts from the report, including the helpful "Michigan HMOs at a Glance" page can be viewed at http://www.allanbaumgarten.com/ . Michigan Managed Care Review 2006, including both Parts One and Two, can be ordered from Allan Baumgarten for $150.00. Call 952/925-9121 or fax 952/925-9341. E-mail address: Baumg010@tc.umn.edu
Allan Baumgarten
CONTACT: Allan Baumgarten, +1-952-925-9121, Baumg010@tc.umn.edu
Web site: http://www.allanbaumgarten.com/
Source: PRNewswire
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