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Healthcare
Managed Care

February, 2009


Single digit growth is projected for the largest industry participants, evidencing increasing competition, a more conservative premium rate increase delta, and corporate personnel cutbacks resulting in contraction of the risk-based lives pool.  Increasing utilization of self-funded plans has also affected fully insured revenue growth.  The industry has experienced investment income declines commensurate with the current economic climate.

Compensatory increases in individual enrollment have occurred across the Industry.  Resulting amplification of risk exposure stemming from litigation, regulatory intervention, and guaranteed issue environments awaits a longer term perspective.

The competitive landscape along with price competitive product preferences by increasingly informed buyers has exerted restraint on pricing initiatives.  Partial margin recovery is projected in 2009 after progressive downtrending since 2005.  Coventry and HealthNet experienced the steepest declines, while CIGNA, Aetna, and Wellpoint were able to modulate a more gradual descent.

Overhead reduction efforts executed through administrative cost controls have been especially effective for Aetna, Wellpoint and UnitedHealth during the past several years.  Discretionary medical cost declines driven by economy related factors paint a more positive picture for the short term.  A higher threshold for Medicaid program profitability will also contribute to a favorable 2009 scenario.


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UnitedHealth Group

January, 2009


As of end 4Q, 2008, declines in commercial risk-based and fee-based enrollments were observed, while Medicaid, Medicare Advantage, and Standardized Medicare Supplement programs continued to expand.

Health Care Services account for 80% of revenue.  Uniprise administers large, self-insured accounts, Americhoice provides Medicaid health care services, and Ovations services are designed for those over the age of 50. 

Prescription Solutions (their PBM business) and OptumHealth (specialized benefits and financial services) are on an upward growth curve.  Ingenix, their health care data analysis division, recently resolved NY State litigation relating to out-of-network fee determinations.  However, under an agreement announced on February 17, 2009, UnitedHealthcare will shut down the Ingenix database. 

Difference of opinion exists as to component MLR (medical loss ratio) direction this year.  For the moment, commercial MLR appears relatively stable, while overall MLR is likely to be heading upward, relating partially to individual enrollment growth and its attendant higher risk parameters.

Fiserv's health related businesses were acquired 1Q, 2008.  UnitedHealth was required to divest its Las Vegas SecureHorizons business as a criteria for the acquisition of Sierra Health in 1Q, 2008.  Humana purchased the 26,700 member Medicare Advantage HMO business as of 2Q, 2008.

UnitedHealth Group acquired Unison in June, 2008, and is expected to progressively expand Medicaid as well as Medicare Advantage enrollment in 2009.  Attrition and account migration will incur declines in risk-based as well as fee-based commercial members.  Premium pricing increases and non-health plan business growth will contribute positively to a projected single digit growth rate for 2009.










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