The Health of the Small-Group Insurance Market.

Issue: There has been relatively little discussion about the small-group employer insurance market since the implementation of reforms under the Affordable Care Act. It is important to understand the condition of this market before the impact of recent regulatory changes from the Trump administration.

Goal: To understand how the ACA’s market reforms have affected prices, enrollment, and competition in the small-group market.

Financial Performance of Health Insurers: State-Run Versus Federal-Run Exchanges.

Many insurers incurred financial losses in individual markets for health insurance during 2014, the first year of Affordable Care Act mandated changes. This analysis looks at key financial ratios of insurers to compare profitability in 2014 and 2013, identify factors driving financial performance, and contrast the financial performance of health insurers operating in state-run exchanges versus the federal exchange. Overall, the median loss of sampled insurers was -3.

How Have Health Insurers Performed Financially Under the ACA' Market Rules?

Issue: The Affordable Care Act (ACA) transformed the market for individual health insurance, so it is not surprising that insurers' transition was not entirely smooth. Insurers, with no previous experience under these market conditions, were uncertain how to price their products. As a result, they incurred significant losses.

Analysis of Actual Versus Projected Medical Claims Under the First Year of ACA-Mandated Coverage.

For the individual market, 2014 was the first year Affordable Care Act medical claims experience data were available to set 2016 rates. Accessing Centers for Medicare and Medicaid Services rate data for 175 state insurers, this study compares projected medical claims with actual medical claims of 2014, as well as the cost and utilization of benefit categories for inpatient, outpatient, professional, and prescription drug spending. Actual costs per member per month (pmpm) were greater than projected in 2014 for inpatient, outpatient, and prescription spending but not for professional care.

Early Experience of Financial Performance and Solvency of Medicaid-Focused Insurers Under ACA Expansion.

To allow for greater coverage of the uninsured, the Affordable Care Act expanded Medicaid coverage in 2014. Accessing financial data of state health insurers from the National Association of Insurance Commissioners, this data trend study compares the financial performance and solvency of Medicaid-focused health insurers prior to and after the first year expansion of Medicaid coverage. After the first year of Medicaid expansion, there was a significant increase in operating profit margin ratio for Medicaid-focused health insurers within expansion states.

How Has the Affordable Care Act Affected Health Insurers' Financial Performance?

Starting in 2014, the Affordable Care Act transformed the market for individual health insurance by changing how insurance is sold and by subsidizing coverage for millions of new purchasers. Insurers, who had no previous experience under these market conditions, competed actively but faced uncertainty in how to price their products. This issue brief uses newly available data to understand how health insurers fared financially during the ACA's first year of full reforms.

Promoting Value for Consumers: Comparing Individual Health Insurance Markets Inside and Outside the ACA's Exchanges.

The new health insurance exchanges are the core of the Affordable Care Act's (ACA) insurance reforms, but insurance markets beyond the exchanges also are affected by the reforms. This issue brief compares the markets for individual coverage on and off of the exchanges, using insurers' most recent projections for ACA-compliant policies. In 2016, insurers expect that less than one-fifth of ACA-compliant coverage will be sold outside of the exchanges.

A Performance Analysis of Long-term Acute-Care Hospitals Owned by Large, Multistate Investor-Owned Companies.

This study provides a descriptive assessment of the operating performance of for-profit long-term acute-care hospitals owned by multistate, investor-owned companies (large FP LTCHs) compared with FP LTCHs owned by smaller FP companies (small FP LTCHs) and nonprofit LTCHs (NP LTCHs). The study used the Centers for Medicare & Medicaid Services cost report data for 290 LTCHs from 2010 through 2012 to compare the financial performance of large and small FP LTCHs and NP LTCHs. The study found that the median operating profit margin for large FP LTCHs was 8.

Hospital Acquisitions Before Healthcare Reform.

The hospital industry has experienced increased consolidation in the past 20 years. Since 2010, in particular, there has been a large rise in the number of hospital acquisitions, and observers have suggested this is due in part to the expected impact of federal healthcare reform legislation. This article reports on a study undertaken to identify the market, management, and financial factors affecting acute care, community hospitals acquired between 2010 and 2012.

Comparing Individual Health Coverage On and Off the Affordable Care Act's Insurance Exchanges.

The new health insurance exchanges are the core of the Affordable Care Act's (ACA) reforms, but how the law improves the nonsubsidized portion of the individual market is also important. This issue brief compares products sold on and off the exchanges to gain insight into how the ACA's market reforms are functioning. Initial concerns that insurers might seek to enroll lower-risk customers outside the exchanges have not been realized.

The Impact of Medicaid Expansion on Medicaid Focused Insurers in California.

To gain insights into the impact of Medicaid Expansion under the Affordable Care Act, this study assesses the enrollment, utilization, and financial performance measures of California Medicaid focused health insurers. The study compares these quarterly measures, during the expansion period of 2014 to the same quarterly measures in 2013 and 2012. During 2014, Medicaid focused insurers expanded enrollment, decreased inpatient days, and generated higher profit margins.

Assessing the Financial Condition of Provider-Sponsored Health Plans.

Purpose: The aim of this study was to assess the performance of health plans sponsored by provider organizations, with respect to plans generating strong positive cash flow relative to plans generating weaker cash flow. A secondary aim was to assess their capital adequacy.

Design: The study identified 24 provider-sponsored health plans (PSHPs) with an average positive cash flow margin from 2011 through 2013 at or above the top 75th percentile, defined as "strong cash flow PSHPs:" This group was compared with 72 PSHPs below the 75th percentile, defined as "weak cash flow PSHPs:"

Methodology: Atlantic Information Services Directory of Health Plans was used to identify the PSHPs.

The federal medical loss ratio rule: implications for consumers in year 3.

For the past three years, the Affordable Care Act has required health insurers to pay out a minimum percentage of premiums in medical claims or quality improvement expenses--known as a medical loss ratio (MLR). Insurers with MLRs below the minimum must rebate the difference to consumers. This issue brief finds that total rebates for 2013 were $325 million, less than one-third the amount paid out in 2011, indicating much greater compliance with the MLR rule.

What's behind health insurance rate increases? an examination of what insurers reported to the federal government in 2013-2014.

The Affordable Care Act requires health insurers to justify rate increases that are 10 percent or more for nongrandfathered plans in the individual and small-group markets. Analyzing these filings for renewals taking effect from mid-2013 through mid-2014, this brief finds that the average rate increase submitted for review was 13 percent. Insurers attributed the great bulk of these larger rate increases to routine factors such as trends in medical costs.

Health insurers' financial performance and quality improvement expenditures in the Affordable Care Act's second year.

The Affordable Care Act requires health insurers to rebate any amounts less than 80%-85% of their premiums that they fail to spend on medical claims or quality improvement. This study uses the new comprehensive reporting under this law to examine changes in insurers' financial performance and differences in their quality improvement expenditures. In the ACA's second year (2012), insurers' median medical loss ratios continued to increase and their median administrative cost ratios dropped, producing moderate operating margins in the group markets but a small operating loss in the individual market, at the median.

The federal medical loss ratio rule: implications for consumers in year 2.

For the past two years, the Affordable Care Act has required health insurers to pay out a minimum percentage of premiums in the form of medical claims or quality improvement expenses--known as a medical loss ratio (MLR). Insurers with MLRs below the minimum must rebate the difference to consumers. This issue brief finds that total rebates for 2012 were $513 million, half the amount paid out in 2011, indicating greater compliance with the MLR rule.

What's behind health insurance rate increases? an examination of what insurers reported to the federal government in 2012-2013.

The Affordable Care Act requires health insurers to justify rate increases of 10 percent or more for nongrandfathered plans in the individual and small-group markets. Analyzing these filings for rates taking effect from mid-2012 through mid-2013, insurers attributed the great bulk--three-quarters or more--of these larger rate increases to routine factors such as trends in medical costs. Insurers attributed only a very small portion of these medical cost trends to factors related to the Affordable Care Act.

Trend analysis of key solvency ratios for health plans in Medicaid managed care.

The focus of this article is to assess the solvency of health plans that manage Medicaid members across key plan traits, specifically Medicaid dominant or plans with more than 75 percent Medicaid members, and plans owned by publicly traded companies, and sponsored by health care providers. The study accessed National Association of Insurance Commissioners (NAIC) financial data and computed key solvency ratios for 117 Medicaid health plans over a five-year time trend from 2007 to 2011. A mean test compared the mean values for each year and for the entire study period on risk-based capital (RBC), cash-flow margin and debt to total capital ratios across these plan traits.

Insurers' medical loss ratios and quality improvement spending in 2011.

The Affordable Care Act's medical loss ratio (MLR) regulation requires insurers to spend 80 percent or 85 percent of premiums on medical claims and quality improvements. In 2011, insurers falling below this minimum paid more than $1 billion in rebates. This brief examines how insurers spend their premium dollars--particularly their investment in quality improvement activities--focusing on differences among insurers based on corporate traits.

Insurers' responses to regulation of medical loss ratios.

The Affordable Care Act's medical loss ratio (MLR) rule requires health insurers to pay out at least 80 percent of premiums for medical claims and quality improve­ment, as opposed to administrative costs and profits. This issue brief examines whether insurers have reduced administrative costs and profit margins in response to the new MLR rule. In 2011, the first year under the rule, insurers reduced administrative costs nation­ally, with the greatest decrease--over $785 million--occurring in the large-group market.

Hospital compliance with a state unfunded mandate: the case of California's Earthquake Safety Law.

Abstract In recent years, community hospitals have experienced heightened regulation with many unfunded mandates. The authors assessed the market, organizational, operational, and financial characteristics of general acute care hospitals in California that have a main acute care hospital building that is noncompliant with state requirements and at risk of major structural collapse from earthquakes. Using California hospital data from 2007 to 2009, and employing logistic regression analysis, the authors found that hospitals having buildings that are at the highest risk of collapse are located in larger population markets, possess smaller market share, have a higher percentage of Medicaid patients, and have less liquidity.

The impact of HCA's 2006 leveraged buyout on hospital performance.

Leveraged buyout (LBO) arrangements are a reorganization strategy whereby a firm assumes a substantial amount of debt to buy back its publicly held stock to become privately held. LBOs offer a firm several advantages and have the potential to increase efficiency. In the past 20 years, several healthcare firms have engaged in LBOs, but the literature on performance changes in healthcare organizations as a result of an LBO is limited.

Estimating the impact of the medical loss ratio rule: a state-by-state analysis.

One of the most visible consumer protections in the Patient Protection and Affordable Care Act is the requirement that health insurers pay out at least 80 percent to 85 percent of premium dollars for medical care expenses. Insurers that pay out less than this minimum "medical loss ratio" (MLR) must rebate the difference to their policyholders, starting in 2011. Using insurers' MLR data from 2010, this issue brief estimates the rebates expected in each state if the new rules had been in effect a year earlier.

The performance of the leveraged buyout of the Hospital Corporation of America, Inc.

Background: A leveraged buyout (LBO) is a type of corporate reorganization and acquisition practice whereby private investors borrow a substantial amount of debt to acquire a firm by buying back its publicly held stock to go private. The Hospital Corporation of America, Inc. (HCA), went through its second LBO in July of 2006.

Analysis of cash flow in academic medical centers in the United States.

Purpose: To examine cash flow margins in academic medical centers (AMCs; i.e., teaching hospitals) in an effort both to determine any significant differences in a set of operational and financial factors known to influence cash flow for high- and low-cash-flow AMCs and to discuss how these findings affect AMC operations.