Health Insurance Blog

Mark Farrah wrote a nice report on the Medicare Advantage marketplace in Pennsylvania.   In summary he found that the 30 health insurers offering Medicare Advantage Plans in PA had a 37% market penetration, one of the highest in the country.  Of the 30 health insurers, more than 20 were based in PA, including three separate Blue Cross Blue Shield member plans.

The Pennsylvania health insurance marketplace is divided into four distinct regions, Western, Southeastern, Central, and Northeastern, with many health insurers focused on specific regions within the state.  For instance, in Western Pennsylvania, there are 20 companies offering Medicare Advantage Plans, but Highmark, and UPMC enroll about 75% of the members in that region.

Statewide there are five health insurers that Mr. Farrah considers the “top tier” in the Medicare Advantage marketplace, and they represent about 75% of statewide enrollment.  They are

1. Highmark with 249,023 members, 30.4% market share
2. Independence Blue Cross with 149,525 members, 18.3% market share
3. Coventry Healthcare with 91,724 members and 11.2% market share
4. UPMC Health plan with 69,758 members and 8.5% market share
5. Aetna with 58,778 members and 7.2% market share

The Pennsylvania competitive landscape will go through drastic changes in 2009, as the two largest players, Highmark, and Independence Blue Cross will finalize there merger this year.  In combination they will insure over 400,000 members and nearly 50% of the market.

Revamping the maligned US health care system was a focal point of President-elect Barack Obama’s campaign, and he will now be tasked with making good on that promise amid a significant economic downturn.

Obama’s plan is to expand Government health programs as well as subsidize health insurance coverage for people who can’t afford it, and technology spending to computerize health records to save money.  This plan to fix the health care system is priority #2 behind only achieving energy independence through further developing alternative energy sources.

Many experts think that change will be incremental but not substantial right off the bat, with the focus on expanding existing programs that assist low-income families maintain health insurance for their families such as children’s health insurance programs, which currently subsidize health insurance for 6 million children across he country.  Expanding programs such as SCHIP and Medicaid would help the health insurers that run the plans, such as Wellpoint, and United HealthCare.  Alternatively, reducing reimburesements  to insurers for Medicare Advantage enrollees would hurt health insurance companies such as Humana and Aetna, who would likely make up the difference in the form of health insurance premiums and/or reduced benefits.

The Centers for Medicare and Medicaid Services (CMS) announced in a memo to health insurance companies that they have a plan to combat rapidly rising commissions paid out to insurance agents selling private Medicare Advantage plans.  Some health insurance companies are paying as much as $600 to an agent for an enrolled member. Three of the market leaders in selling Medicare Advantage plans include Aetna, Humana, and United Healthcare.

Rules that CMS put in place Sept. 15 to prevent “churning” (encouraging customers to enroll in a different plan each year so the agent can receive a higher commission associated with the first year of enrollment in a health plan) have had the unintended consequence of increasing agent commissions across the board.

It appears as if new changes will be put in place to correct this problem next year as both Senate Finance Chairman Max Baucus, as well as Pete Stark, who chairs the House Ways and Means Health Subcommittee have mentioned plans to cap commissions.  In addition, both Humana and UnitedHealth have weighed-in supporting CMS corrective action.

Bloomberg.com reports that premiums for medicare drug coverage will rise more than 20% on average from 2008 to 2009.  This expected rate increase is on the heals of another 20%+ rate increase from 2007 to 2008.

Among the largest medicare drug plans, AARPs MedicareRx is increasing rates by 8% while Humana’s PDP Enhanced plan is raising premiums by 64%.

According to health insurance companies such as Humana, the volatility in premiums charged for these drug plans can be blamed on inaccurate forecasting of drug costs.  Humana’s PDP plan’s premiums have quadrupled since its inception in 2006.  While most senior citizens tend to stick with the same drug plan that they are already enrolled in, the volatility in prices has made it important for seniors to shop around for the best rate.  For 2009 there are nearly 1,700 government approved prescription drug plans, and every Medicare enrollee in the country (except for Alaska) has a plan available to them at a monthly cost of less than $20 per month.

Nationally, about 16 million Americans enroll in a standalone medicare drug plan such as AARPs MedicareRX, as opposed to obtaining drug coverage through a comprehensive health care plan such as Medicare Advantage.

CIGNA has announced they will offer their Medicare Advantage products to an additional 15 states in an effort to grow its business by targeting the senior market (age 65+).   In addition to growing their state footprint substantially from 13 states to 28 states, the senior health plans will expand their coverage within the states in which they already do business, covering more counties.   Some of the larger states that will be added to CIGNAs new Medicare Advantage service area inlcude California, Ohio, Florida, Illinois, and Massachusetts.

Medicare Advantage plans include Medicare HMOs, PPOs, Private Fee-For-Service Plans and Medicare Special Needs Plans.

For additional resources about Medicare Advantage plans, and other Medicare options, you can visit http://www.medicare.gov/choices/advantage.asp.