U.S. health insurers did well during the first 9 months of 2011, but there are signs that they may soon run into Patient Protection and Affordable Care Act (PPACA) turbulence, according to ALIRT Insurance Research L.L.C., Windsor, Conn.
Analysts at ALIRT, a company that helps clients analyze insurer stability, have based their latest health insurance industry review on data from 100 large health insurers, including health maintenance organizations, that file statutory financial reports on the health blank.
The companies seem to be on track to report a total of about $230 billion in premium revenue for 2011, up 1.1% from the 2011 total. During the first 9 months of the year, their surplus increased 6.2%.
But the rate of increase in surplus was down from 11% in 2010. The largest drops in surplus occurred at health insurers that sent large sums of cash up to publicly traded parent companies, the ALIRT analysts found.
Enrollment shrinkage fell to 1.1% from 4.6%, but enrollment still shrank. One reason is continuing high unemployment, but another is that some employers appear to be reducing or eliminating health benefits, the analysts say.
The medical loss ratio (MLR), or ratio of medical costs to premiums, fell to 83.9%, from 84.6% for the first 9 months of 2010.
PPACA now requires health insurers to use 80% of individual and small group revenue and 85% of large group revenue for health care and quality improvement efforts. Insurers that go below the federal MLR thresholds are supposed to send customers rebates, or else compensate customers by providing benefits enhancements.
"It will be interesting to note which insurers are required to rebate funds to policyholders in 2012 based upon their underwriting results for the full year 2011," the analysts say.
The MLR figures reported in the blanks and the MLR figures used for rebate calculations may differ, and the ALIRT MLR totals include individual and small group business as well as large group business. But, if the overall PPACA is about 1%, the health insurers ALIRT tracks might have to provide about $2 billion in rebates and adjustments.
WHO KNEW THE FEDERAL REGISTER COULD BE SO EXCITING?
The Deloitte Center for Health Solutions, Washington, has published a handy PPACA implementation timetable.
The guide gives the states when the U.S. Department of Health and Human Services is supposed to reach specific PPACA implementation milestones, such as applying a PPACA provision that will require health plans, employers and health insurers to provide standardized Summaries of Benefits and Coverage (March 23, in theory), and when Medicare is supposed to reduce provider payment rates when patients return to inpatient hospitals shortly after leaving due to what appear to be preventable problems (October).
Federal agencies post drafts of the regulations, drafts and guidance used in the implementation process on their websites, at the Regulations.gov website, and in the Federal Register.
HATE THE MEDICARE BID PRICING TOOL? SPEAK UP
The Centers for Medicare & Medicaid Services (CMS) is putting the Medicare Bid Pricing Tool (BPT) through a routine Office of Management and Budget Review (OMB).
Federal law requires agencies to put information collection activities through a regular review process in an effort to improve collections with problems and eliminate unnecessary collections
The insurers and other organizations that run Medicare Advantage plans and Medicare Part D prescription drug plans use the system to develop actuarial pricing bids for program participation.
The tool collects data such as medical claims data, administrative expenses data, profit levels, and projected plan enrollment information.
Officials estimate that 530 respondents spend 143,100 hours per year preparing 4,770 responses using the tool.
CMS also is putting the Medicare Advantage and Medicare Part B benefit and drug "formulary," or covered drug list, package submission processes through OMB review.
A total of 635 organizations spend 53,291 hours preparing 6,015 benefit and formulary packages, officials say.
Comments are due Feb. 3.
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