Big 5 insurers depend on Medicare, Medicaid for growth in enrollment, profits

The nation's five largest insurers are increasingly dependent on government programs such as Medicare and Medicaid for growth in enrollment, revenue and profits, according to a new Health Affairs study.

UnitedHealthcare, Anthem, Aetna, Cigna, and Humana collectively cover 43 percent of the total U.S. insured population, the report said.
Due in large part to an aging baby boomer population, Medicare and Medicaid account for nearly 60 percent of the big five's revenues and 20 percent of their plan membership.

[Also: Here's how 5-star Medicare Advantage plans stay on top]

All saw enrollment increases -- a collective 23 percent -- in and out of government business. Four out of five insurers grew enrollment by at least 20 percent from 2010 to 2016. UnitedHealthcare's enrollment rose 33 percent, from 30.2 million members in 2010 to 40.1 million in 2016.

The membership increase from 2010 to 2016 for the five insurers combined was more than double the increase from 2005 to 2010, the five years leading up to passage of the Affordable Care Act.

[Also: CMS expands Medicare Advantage value-based insurance design model]

But Medicare and Medicaid membership grew faster than other segments in all five companies, doubling from 12.8 million to 25.5 million from 2010 to 2016.

In Medicaid alone, enrollment more than doubled from 2010 to 2016, increasing from 7 million to 15 million.

[Also: Rural Medicare pilot tests feasibility of paying for actual cost of care]

Medicare and Medicaid accounted for at least two-thirds of Anthem and Humana's growth since 2010.

As for Medicare Advantage, the five top insurers accounted for 52 percent of the MA market in 2016.

Of the five insurers, Humana is also the most dependent on Medicare. One-third of its members are in Medicare Advantage plans. Another 5 million Medicare beneficiaries have Humana Part D plans.

Some of the insurers strategically positioned themselves for growth in Medicaid by acquiring plans active in the Medicaid market, the report said.

For example, Anthem, then known as WellPoint, purchased Amerigroup in 2012, more than doubling its Medicaid membership and expanding into 20 new states.

Aetna acquired Coventry in 2013, adding nearly a million Medicaid members and expanding from 12 to 16 states.

UnitedHealthcare's rapid membership growth has been fueled by substantial increases in both Medicare and Medicaid. The company acted early to expand into Medicare by partnering with AARP to offer Part D coverage and buying regional plans that had Medicare Advantage business.

By 2016 UnitedHealthcare also sponsored Medicaid plans in 22 states.

Among the five insurers, Cigna has the smallest share of its membership in Medicare and Medicaid.

Overall, the five largest insurers have remained profitable since passage of the ACA as a result of profits in other market segments, the report said. The Affordable Care Act marketplaces have represented only a small fraction of insurers' members.

Many withdrew from the ACA market or reduced their marketplace footprint.

Notably, companies with significant Medicare or Medicaid enrollment have continued to insure beneficiaries in states where the insurers do not participate in marketplaces, the report said.

There is potential to improve ACA access if federal or state governments, or both, required insurers that participate in Medicare or Medicaid to also participate in the marketplaces in the same geographic area, the report said.

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com