Shift Toward Government-Backed Plans A Major Trend In Health Care

There has been a “seismic shift” toward government-sponsored health care in the past four years, and health insurers must pay attention to it, said a speaker at Monday’s Society of Insurance Research virtual annual conference.

Geoff Cich, director of competitive intelligence with Florida Blue, looked at some trends in the health insurance industry and saw an increasing shift toward government-sponsored business.

Since 2017, the percentage of managed care organization members who receive care through Medicare or Medicaid jumped from 31% to 41%. Medicaid currently makes up 25% of the MCO membership mix while Medicare has 16%. Meanwhile, commercial self-funded insurance makes up the biggest piece of the pie at 43%, although that share decreased from 50% in 2017. Commercial private insurance makes up 16% of the mix, down slightly from 19% in 2017.

The expansion of Medicaid is driving the trend toward government-funded health care, Cich said. In many states, consumers who previously were uninsured were moved to Medicaid. In addition, many employer-sponsored groups reduced their roles in health care.

Cich gave some recent examples of emerging trends in health insurance:

The Rapid Increase Of Government Business

• The top MCOs have seen an increase in Medicare and Medicaid business as states expand eligibility.
• Medicare remains a growth market, and 2021 has been a record year.
• Medicaid expansion remains possible in many states.

Continuing Shift In Commercial Funding Mix

• Self-insured and level-funding popularity are aiding a contracting market.
• Association health plans artificially contract small group plans while those that are self insured impact the full-insured employer-sponsored insurance market.

In addition, he noted that there is a continued shift in the commercial funding mix with the self-insured mix continuing to increase. Since 2010, about 13 million covered lives have converted to self-insured plans.

Fully insured small-group plans are an area in which insurers were likely to see the largest profit pools, Cich said. But they face pressures from self-funded plans, association health plans and integrated health reimbursement arrangements.

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at Susan.Rupe@innfeedback.com. Follow her on Twitter @INNsusan.

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Susan Rupe is editor in chief, magazine, for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at susan.rupe@innfeedback.com.