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Mark Farrah Associates (MFA), a leading provider of market data and intelligence solutions to the health care industry reported a huge decline in member ship among eight top health insurers: Aetna, CIGNA, Health Care Service Corporation (HCSC), Health Net, Humana, Kaiser Permanente, UnitedHealth Group and WellPoint.
Enrollment declines continued for most of the nation’s leading health insurers through 2009. Between December 2008 and December 2009 top plans saw an aggregate decline of 2.2 million members. Losses continue to be experienced in both the fully-insured and administrative services only (ASO) segments. The difficult economy continues to take a toll in terms of rising medical expenses and declining membership for most plans.
This kind of reduction can lead to price increases to health plans.
Example
When the employees are laid off there is a higher probability that the un healthy employees will elect Cobra. The healthy employee can go out to market and find lower cost alternatives. Now within the group plan we have adverse selection. Without the additional premium to offset the claims this could lead higher cost.
When we add the COBRA subsidy to the equation the group plan is now picking up claims that might not have been there if the Gov was not paying 65% of the premium. Those claims can have a large impact on loss ratios which can lead to the plan costing more.
