Florida Commercial Health Plan Enrollment Continues Overall Slide

By Andrew G. Simpson | December 22, 2011

Enrollment in commercial health insurance in Florida was down 4.3 percent in 2010, the fifth straight year it has dropped.

The annual report of the Florida Health Care Insurance Advisory Board shows that total enrollment in state’s group and individual insurance markets has steadily declined over the last five years, falling from 4.5 million people in 2006 to 3.7 million last year.

The report says that the five-year decline is most likely due to the downturn in the economy.

While overall enrollment declined in 2010 again, the individual market (up 3.0 percent) and the large group market (up 7.1 percent) showed gains — two trends that the FHCIAB said raise questions.

In-state guarantee issue enrollment showed the largest increase in 2010, up nearly 30 percent from 2009 and up 58 percent from 2008 to 98,823 covered lives. In-state individual underwritten enrollment, however, has remained fairly flat over the past five years. In-state 1 to 50 member groups’ enrollment numbers have been steadily decreasing since the spike in 2007. In 2010 enrollment declined 19 percent from 2009 to 864,723 covered lives.

Conversely, the report says, total out-of-state 1 to 50 member groups’ covered lives have sharply increased in 2010 compared to 2009 and 2008. The enrollment numbers rose 44.3 percent to 7,026 covered lives.

Individual Market

The individual health insurance market, which can provide gap coverage for those who without access to employer group coverage, has been growing as the employer-sponsored market has been shrinking.

Enrollment in the individual market peaked in 2006 and it has increased annually since, rising to 787,545 lives in 2010, an increase of 3.0 percent from 2009, but down only 0.4 percent from the 2006 high.

However, the report notes, 30 percent of the rise in individual market is tied to the federal Health Insurance Portability and Accountability Act (HIPAA) under which companies providing individual coverage in Florida are required to issue coverage to applicants on a guarantee issue basis.

HIPAA applicants typically automatically qualify for coverage and are not medically underwritten.

The growth in HIPAA policies within the individual market is troubling, according to FHCIAB.  These policies typically represent a small portion of the individual market, which the FHCIAB said is important since they tend to have higher potential claim costs than policies that are medcially underwritten.

“While on the surface there is reason to be heartened by the increase in overall enrollment, the data indicates the entire increase in coverage is due to a dramatic rise in HIPAA-issued coverage. Although there was a slight increase of 13 percent in medically-underwritten individual coverage in 2010, there was an increase in HIPAA-issued coverage of 30 percent,” the report said.

Commercial Premiums

The large group market showed an increase in enrollment (up nearly 7.1 percent) in 2010, yet overall premium collections decreased by 23 percent over the same period. The report said the state insurance department is investigating this anomaly.

In the small group market, where enrollment declined 19 percent, premiums collected mirrored the loss by declining 13 percent. Enrollment increased 1.3 percent in the individual market from 2009, and premium collections followed that gain by rising 5.3 percent.

Loss Ratios

In-state large group experienced a loss ratio of 84.1 percent in 2010. The loss ratio in 2009 was 89.2 percent, so 2010 represented a significant decrease.

Small group loss ratios dropped more significantly, from 81.9 percent in 2009 to 71.9 percent in 2010. To explain the decrease, the report cited speculation that utilization has dropped since the economy went into its downturn.

Individual market loss ratios remained relatively stable on the medically underwritten side, coming in at 59.7 percent for 2010, pretty close to 62.7 percent in 2009. In-state HIPAA-issued policies experienced an 88.9 percent loss ratio for 2010, down from 97.8 percent in 2009; HIPAA-issued certificates issued through out-of-state associations reported a lower loss ratio for such coverage, 117.5 percent, down from 125.7 percent in 2009.

Group conversion policies represent an important safety net for individuals and families losing group coverage, and also play an important role in Florida’s HIPAA mechanism, according to the report. Those opting for such coverage likely would not be able to qualify for a medically-underwritten policy, thus the loss ratios in the conversion market are also high, coming in at 130.8 percent for 2010, up from 129.9 percent in 2009. Group conversion enrollment has remained relatively stable over the years, coming in at 55,862 in 2010, up 13.8 percent since 2006.

The data in the report comes from licensed carriers describing their operations in Florida for the 2010 calendar year.

The report did not address the Affordable Care Act, the U.S. Supreme Court Case challenging the Affordable Care Act, or the Department of Health and Human Services’ recent denial of Florida’s application for an adjustment to the medical loss ratio (MLR) for the individual marketplace.

The FHCIAB board membership includes representatives of healthcare providers, insurers, benefits consultants, business executives and insurance and managed care regulators.

 

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