McKinsey Center for U.S. Health System Reform
Health insurance enrollment and revenue shifts 2013-2014 An emerging story By enrollment
By revenue
Share of payors' aggregate enrollment and revenue in Medicaid and the Individual market has grown Percentage share of enrollment
Percentage share of revenue from premiums
2013 100% = 230 million 7
2014 100% = 247 million
40
5
20
9
28
19
19
Managed Medicaid
12
Large Group (LG)1
27
29
33
7
Small Group (SG)1
Medicare Part C, D
3
7
22
2014 100% = $743 billion
3
7
16
41
2013 100% = $641 billion
10
5
24
7
Administrative Services Only (ASO)2
Individual
Absolute enrollment and revenue have also grown, by 17 million lives and $86 billion, respectively Change in enrollment (millions)
Change in revenue ($ billions)
2013 – 2014
2013 – 2014
4
2 5
4
6
2
2013 Mcare Part Mngd C, D Mcaid
641 Ind
SG1
LG1
ASO
2014
<1
2
57
247
10
230
22
733
16
2013 Mcare Part Mngd C, D Mcaid
Ind
SG1
LG1
ASO2
2014
Health insurance enrollment and revenue shifts 2013-2014 | Page 1 of 2
McKinsey Center for U.S. Health System Reform
Health insurance enrollment and revenue shifts 2013-2014 An emerging story continued Year 1 financials: the Individual market Although Individual market revenues have grown, payors lost $2.5 billion in 2014 there, after reinsurance and risk adjustment
2014 Individual market post-2R operating gain/loss3 Estimated market-wide loss
‑$2.5B
Estimated full year loss per member
‑$163
2014 performance in the Individual market varied among payors — most lost money, but ~35% made money 28
Payors, %
9
2
2
8
15
23 8
1
36
29
Enrollees, % Loss > $50M
4
10
4
2
Loss $40 – 50M
Loss $30 – 40M
Loss $20 – 30M
5
7
Loss $10 – 20M
Loss $0 – 10M
3
5
Gain $0 – 10M
Gain $10 – 20M
0 Gain $20 – 40M
Gain $40M+
Methodology All findings based on publicly available sources. For enrollment and revenue shifts: Estimated enrollment is based on the following sources: CMS enrollment reports (Medicare); NAIC financials, IRS 990 reports, select state websites, DMHC reports (Medicaid); NAIC financials, DMHC reports (Individual, Small Group, Large Group); Kaiser (ASO). Estimated revenues, based on McKinsey Payor Financial Database, which includes NAIC financials of SHCE filings, DMHC filings, IRS 990 forms, DMHC financials, select state websites. For year 1 financials: We analyzed all available 2014 Supplemental Healthcare Exhibits filed by payors for their Individual medical insurance business (comprising 92% of payors). Profitability is based on reported post-tax margin adjusted for the difference between reinsurance and risk adjustment (as booked at the end of 2014) and CMS reported reinsurance and risk adjustment payments as of 06/30/2015, assuming a corporate tax rate of 35%. Risk adjustment bookings were attributed to the Individual line of business based on relative proportion of reported member months. The effect of risk corridors were not included as carrier-specific risk corridor data has not yet been released. 1
Fully insured only
2
Self-insured of all employer sizes; excludes stop loss revenue
3
Includes ACA compliant (on and off exchange) and non-ACA compliant plans
healthcare.mkinsey.com/reform
McKinsey Center for U.S. Health System Reform Health insurance enrollment and revenue shifts 2013-2014 | Page 2 of 2