Copyright ©2002 Allan Baumgarten
Enrollment in HMOs decreased in many states in 2000 and continued to decrease in the first half of 2001. This analysis is based on the research we perform to prepare our annual Managed Care Reviews in eight states.
During the mid-1990s, HMO enrollment increased steadily in all three major lines of business: commercial groups, Medicare and Medicaid. Employers turned to HMOs to save money, while thousands of seniors joined Medicare HMO plans. States mandated that welfare recipients enter HMOs and encouraged voluntary enrollment of other Medicaid beneficiaries. A large crop of new HMOs was created during those years to take advantage of the new opportunities.
In the states that we study, enrollment generally peaked in 1999. Commercial enrollment dropped as employers, concerned about steadily rising premiums, began to explore PPOs and other options. Medicare+Choice plans pulled out of numerous markets or significantly reduced supplemental benefits while increasing enrollee co-premiums.
In five of the seven states, enrollment dropped in 2000. The results for the first half of 2001 are shown in the table below. With the exception of Michigan, enrollment dropped by at least 3% in these states. For example, Ohio HMOs lost 104,000. Enrollment dropped in commercial and Medicare products. States that saw their Medicaid caseloads drop steadily during the boom years of the 1990s are now seeing an increase in Medicaid recipients. That in turn is reflected in growing enrollment in Medicaid HMO plans. Michigan is the only state in the group that reported a net enrollment gain. It also saw a decline in commercial and Medicare enrollment, but that was offset by an increase in Medicaid HMO enrollment.
State 2000 Enrollment June 2001 Enrollment Change
Colorado 1,636,672 1,560,237 -4.7%
Florida 4,860,239 4,698,768 -3.3%
Illinois 2,386,642 2,318,302 -2.9%
Michigan* 2,754,930 2,777,700 0.8%
Minnesota* 1,246,174 1,244,600 -0.1%
Ohio 2,686,507 2,582,153 -3.9%
Texas 3,938,259 3,714,670 -5.7%
* Michigan and Minnesota based on September 2001 enrollment
The chart below summarizes HMO enrollment growth rates in these seven states for the last several years.
Other key findings that are in Ohio Managed Care Review 2001, released two weeks ago:
o Enrollment in Medicare HMO plans peaked in 1999 and now only a few plans will continue to offer plans in 2002. In 1999, 19 HMOs offered senior plans in Ohio, enrolling 300,000 members and competing vigorously. In the last two years, most of them have dropped out leaving only a handful still in the business for 2002. In Cincinnati and Columbus, only two senior plans with reduced benefits will be available in 2002. Only one plan will be offered in Toledo.
o Average premium revenues increased by 11.9% in 2000, but HMOs lost money for the second straight year. On average, HMOs collected $144.73 per commercial member per month, up from $129.30 in 2000. Still, they face strong upward pressure on their medical costs. The average medical loss ratio increased from 89.5% in 1999 to 90.7% in 2000.
o Ohio HMOs lost $41.2 million in 2000 and another $25 million in the first half of 2001. A few HMOs, such as Aetna U.S. Healthcare, account for most of the losses. (Note that this analysis does not include results for Anthems Health Maintenance Plan or QualChoice in Cleveland, because they do not provide comparable data to the state.)
To view excerpts from Ohio Managed Care Review 2001, including the popular "Ohio HMOs at a Glance," or to order copies, go to http://www.AllanBaumgarten.com