The market for commercial full-risk insurance is slowly declining amid the rise of self-insurance, but a few large nationals, the Blues and some integrated care plans are still seeing healthy business.
Commercial full-risk enrollment, the bread and butter of many health plans, fell by 2 million lives or about 2.5 percent, to 78.5 million in 2012, according to a compilation of insurer filings by Citi Research.
The 2.5 percent drop shows "the significant attraction many employers have for non-risk product" and continues a trend of risk-based enrollment falling by some 14 million lives at publicly-traded plans since 2002, wrote Citi managed care analyst Carl McDonald, who led the study, the firm's second tracking the national commercial full-risk market.
The rise of private exchanges for both small and large businesses could slow the loss of risk-based enrollment, "but the benefits of self-funding are so significant for many employers that we believe risk enrollment will continue to shrink," McDonald wrote.
While risk-based commercial plans lost 2 million lives in 2012, premium revenue did grow by 0.2 percent, to $317 billion, due to rate increases of 1.8 percent, McDonald and his colleagues found. Including higher deductibles and copays, the average commercial plan member was paying monthly premiums of $337.
Between both public and private exchanges, the rise of self-funding and new provider-based plans, premium increases may stay in the single digits as competition increases, although a number established payers have fairly strong footholds.
Changing market for full-risk
Across the combined individual, small and large group full-risk commercial markets, WellPoint remained the leader in market share in 2012, with a 13.2 percent hold across the country, followed by UnitedHealth Group at 12.1 percent, Kaiser Foundation Health Plan at 10 percent, Aetna at 7 percent, Health Care Services Corporation at 6 percent, Blue Shield of California at 2.8 percent, Cigna at 2.2 percent, CareFirst at 2.2 percent, Blue Cross Blue Shield of Michigan at 2 percent and Blue Cross and Blue Shield of Florida at 2 percent.
Across the product lines, there was some variation. WellPoint remained the market share leader in individual market, while UnitedHealthcare had the most small group members and Kaiser the most large group members.
The non-profit Blues are also maintaining their dominance, holding a 37 percent market share on full-risk commercial membership, claiming at least half of the market in 30 states, including 18 where market share exceeds 70 percent, McDonald and his colleagues found.
In total membership, WellPoint remained the largest insurer (again, not including self-funded and ASO products) with 10.2 million lives, followed by UnitedHealth Group at 9.7 million, Kaiser at 7.1 million and Aetna at 5.7.
Between 2011 and 2012, Humana had the largest full-risk commercial membership increase of 8 percent, with 2 million lives, while Cigna had the largest decrease, of 27 percent, with membership falling from 2.2 million lives to 1.6 million (although Cigna saw a 53 percent increase in its individual business line).
WellPoint and Aetna both saw membership decline by more than four percent, while United's slipped by less than two percent. However, Aetna now has the most diversified commercial risk business, with its five largest states contributing about half of their commercial revenue, McDonald noted.
In premiums, WellPoint took in $41.9 billion in 2012, 3.5 percent less than it did in 2011, while United's $38.5 billion largely mirrored the previous year, Aetna took in 1.2 percent less, $22 billion, and Health Net four percent less, $5.6 billion.
Among the large publicly-traded plans, only Humana and Cigna saw premium revenue increase, both largely from individual market membership surges. Humana took in $5.7 billion in 2012, 4.2 percent more than in 2011, and Cigna collected $6.8 billion, an increase of 1.4 percent.
On an underwriting basis in the full-risk commercial market, the ten most profitable insurers in 2012 were UnitedHealth (with a margin of 5.4 percent), WellPoint (4.3 percent), Kaiser (4.1 percent), Horizon Blue Cross (3.9 percent) and HealthPartners (3.5 percent). HCSC (3.1 percent), Intermountain Health Care (3.0 percent), BlueCross BlueShield of Tennessee (2.8 percent), Blue Cross and Blue Shield of Louisiana (2.7 percent) and Independence Blue Cross (2.7 percent).