Ohio Health Markets: How Do They Compare?

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Ohio Health MarketsHow Do They Compare?

• Presented to
• Health Action Council
• May 24, 2006
• Allan Baumgarten, J.D., M.A.

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Presentation Outline

• Key trends for health plans
• Commercial enrollment moves to PPOs
• Profitability is generally strong
• Premium revenues
• Market niches - new Medicaid plans
• Competing hospital systems in Ohio
• Purchaser concerns

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Ohio HMO Enrollment, 1995-2005
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HMO Enrollment Growth (or not) in Ohio and Other
States
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Market Share for Other Ohio Health Insurance Plans
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Managed Care as a Focused, Niche Market

• Emergence of new HMOs for Medicaid/SCHIP - in
  Ohio AmeriGroup, Centene (Buckeye), Molina
• Commercial plans shift out of HMO to PPO and
  similar plans - examples of United and Humana
• New Medicare HMOs form in several states or enter
  new states
• Fewer regional plans remain as provider systems
  exit insurance business - Ohio examples of
  SummaCare, Family Health and QualChoice

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HMO Enrollment Declines Because

• Employers move to PPOs because of
• Narrow premium gap
• Perceived enrollee satisfaction
• Self-funding preferred in times of high rate
  increases
• Health plan preference/strategy away from risk
• The fall of MedicareChoice - the rise of
  Medicare Advantage?
• Trend moderates because of growth of Medicaid
  managed care - but - Medicaid is increasingly a
  niche business

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Strong Health Plan Profitability

• Medicare is especially strong in some states
• Commercial plans maintain the spread between
  premiums and medical costs - medical cost
  increases fell below projections and pricing
• Medicaid HMOs are seeing strong net income and
  are eager to expand

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HMO Net Income in Ohio andOther States
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Premium Revenue Trend For Ohio HMOs
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HEDIS Measure Comparison
Acute Days Control High BP Rating of Health Plan
Aetna 243 61.35 59.04
Anthem 238 75.13 69.33
Kaiser 209 57.42 73.02
Medical Mutual 191 63.50 65.75
UnitedHC 211 67.09 61.29
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2004 Hospital Market ShareNortheast Ohio
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Hospital System Net Income, 2002-2004
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Hospital System Revenue Per Inpatient Day
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Cincinnati Area Hospital Market Share, 2004
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Hospital System Net Income
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Cincinnati Hospital Revenue
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Provider Relations and Payment

• Consolidated hospitals gain increased leverage in
  negotiations - drop unprofitable contracts, push
  back on payment rates
• Physicians still struggle with organizational
  models, risk arrangements
• Overall use of capitation declines - in Ohio from
  19 of provider payments in 2000 to 8 in 2004

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Incentives for Providers

• Pay for Performance
• Designated providers
• Tiered networks

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Purchaser Initiatives Questions

• Employers seeking predictability in costs, while
  preserving access to broad provider networks.
• Employers pay when hospitals use their leverage
  to increase payment rates from health plans
• Interest in consumer-choice plans but
  hesitation about unanswered questions (tax
  treatment, impact on people with chronic
  conditions).
• Variation in practice - can you design networks
  and benefit plans based on identifying high
  performing providers?
• Pay for Performance initiatives - value added?

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Conclusions/Comments

• The challenge is the same how can we expand
  access to high-quality care while containing
  growth of costs?
• How can the interest of all parties be aligned -
  consumers, providers, purchasers and health
  plans?
• How to focus policymakers of issues of access,
  affordability and quality of care?

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For Additional Information

• Allan Baumgarten
• www.AllanBaumgarten.com
• 4800 W. 27th Street
• Minneapolis, MN 55416
• E-mail Baumg010_at_umn.edu
• 952/925-9121 Fax [phone]