Medicaid managed care sees surge in enrollment, revenue

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Medicaid managed care enrollment surges leading to higher revenues

Over the last five years, increased enrollment within Medicaid managed care plans has led to a 132 percent spike in revenue for insurers, according to a financial analysis released by Milliman.

Managed care plans saw particularly large gains within the last year thanks to provisions of the Affordable Care Act that expanded Medicaid and fueled growth within the managed care market. Between 2014 and 2015, the average profit for Medicaid managed care plans increased from 2.1 percent to 2.6 percent, according to the report. Enrollment increased 25 percent over that same time period and overall revenues grew to 30 percent, reaching $144.1 billion.

The authors note that “several Medicaid expansion programs” were introduced in 2014, which contributed to a 37 percent drop in uninsured inpatient stays. Previous reports show Medicaid expansion has saved billions of dollars in uncompensated care and offered a financial windfall for insurers.

“We expect to see enrollment stabilize in these programs following periods of enrollment ramp-up, but anticipate that as states continue to transition additional populations to managed care programs, the enrollment in general may rise,” the analysts wrote.

In April, the feds finalized a long awaited rule that will place further restriction on Medicaid managed care plans by creating a quality rating system, allowing states to set network adequacy standards, and setting a medical loss ratio at 85 percent. According to Milliman’s analysis, the average medical loss ratio for Medicaid managed care plans stood at 85.4 percent in 2015, down from 87.9 percent in 2012.

For more:
- read the Milliman report