A.M. Best Special Report: More Than Half of U.S. Provider-Owned Plans Experienced Underwriting Loss in 2016
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The Best's Special Report, titled, "Growing Pains as More Providers Set-Up Their Own Health Plans," states that the total population of plans in this report experienced a
Commercial business remains the predominant business line for provider-owned plans, accounting for more than half (54.5%) of the aggregated premium mix in 2016-noticeably higher than the health industry's aggregated 38.2%.
However, a shift toward individual commercial business is affecting operating results. The poorer-than-expected experience reported by the Patient Protection and Affordable Care Act exchange marketplace population consistently has increased the medical loss ratio (MLR) on individual commercial business for provider-owned plans each year from 2013-2015, before posting a marginal reduction in 2016. The individual commercial business MLR has been substantially higher than the group business MLR. Because some provider-owned plans have either unexpectedly underpriced or aggressively priced some commercial products to remain competitive, the losses on the exchange business have exacerbated the deterioration in performance. Although this trend is evident throughout the health industry, it does appear to be more pronounced in the provider-owned space.
To access a copy of this report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=262508.
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