UnitedHealth and Anthem Look to Purchase Smaller Carriers
TheStreet.com reports that UnitedHealth, Anthem, Aetna, Humana, and Cigna are involved in a buzz of merger and acquisition activity, as the health insurance industry is responding to the aftershocks of the Affordable Care Act.
Fitch Ratings reports that a combination of any of the five largest U.S. health insurers could accelerate further merger and acquisition activity in the managed care sector. Just one mega M&A deal could lead to similar responses by competing firms seeking to shore up competitive disadvantages in scale and product lines. Fitch sees the M&A potential in the health insurance sector as a direct response to anticipated market conditions in a post-Affordable Care Act (ACA) world. Rumors of health insurance M&A activity among the five largest publicly traded health insurers in the U.S. have accelerated in recent weeks.
Fitch says that the ACA, would add to health insurers’ membership volumes, but reduce member margins. This margin pressure would be exacerbated by the government’s challenging fiscal condition, employers’ on-going desire to reduce health care costs, and a heightened need to invest heavily in technology.
As a result, Fitch believes that size and scale are quite important to health insurers’ competitive positions and financial results. In addition, the importance of product line (i.e. individual, group, Medicare, Medicaid) diversification will increase in response to the government’s increasing role in the market, the aging U.S. population and employers’ desires to reduce health care costs. For more information, visit fitchratings.com.
Proposed Obamacare Rates 12% higher for 2016
Affordable Care Act (ACA) premiums will go up an average of 12% for 2016 over 2015, according to a report by HealthPocket. The company analyzed rate filings for 3,771 plans in 45 states. Silver plans, the most popular exchange plan, account for 67% of exchange plan selections. The proposed 2016 rates for averaged 14% higher for Silver plans, 16% higher for Gold plans , 9% higher for entry-level Bronze plans, and 6% higher for Platinum plans.
Proposed rate increases vary depending on the type of plan. For example, rate proposals for HMO and EPO Bronze plans were 20% higher than 2015 while PPOs were only 4% higher. The 2016 rates represent the first time Affordable Care Act insurers have had a full year of medical claims data with enrolles who cannot be turned away due to a pre-existing condition. Proposed rates must be reviewed and approved by state insurance regulators, which may result in lowering some proposed rates. Some consumers will see lower premium increases due to subsidies, but unsubsidized consumers will endure the full cost of any approved rate increase. For more information, visit HealthPocket.com.
Some Really Good Reasons to Maintain Employee Health Benefits
Employers who fail to fully sponsor their employees’ health benefits would face widespread employee dissatisfaction, lower productivity, and the loss of nearly a third of their employees within a year, according to new research by Accenture. Seventy-six percent of workers say health insurance is a vital factor in staying with their employer. Thirty-one percent say that if they lost their health insurance, they would leave their job within 12 months, with 15% saying that they would quit immediately. If their employer dropped health coverage 64% of workers said they would be very dissatisfied with their employer; 34% would be less motivated to work hard; and 21% would be absent more often. For a company with 1,000 employees who earn an average salary of $50,000, these turnover costs could climb to more than $3 million in the first year alone. For more information, visit www.accenture.com.
Nominate a HealthCare Consumerism Superstar
The Institute for HealthCare Consumerism is seeking nominees for HealthCare Consumerism Superstars. Nominees can represent employers, health plans, brokerage/consulting firms, financial institutions, TPAs, non-profits, and all major players in the diverse health and benefit industry. For more information, visit theihcc.com/en/membership/nominate_a_superstar.
Life Insurance Sales Get Boost
U.S. application activity for individually underwritten life insurance was up 2.7% in May, year-over-year, according to the MIB Life Index. Life insurance application activity has been strong from the fourth quarter of 2014 through the first five months of 2015. March 2015 is the only exception. Year-to-date life insurance application activity was up 2.1% compared to the same five-month period last year. May’s activity was off 8.2% from that of the prior April, which is consistent with seasonal declines for this time period.
In April (5.9%) and May (4.3%), growth of ages 0 to 44 life insurance applications outpaced all other age groups. As of the end of May, ages 0 to 44 were up 4.3%; ages 45 to 59 were up slightly 0.5%; and ages 60 were up 1.6%. After years of decline, the 0 to 44 age group has trended positive since fourth quarter 2014 with January, April, and May 2015 all showing significant gains. For more information, visit mibsolutions.com.
Covered California Has Saved Consumers Tens Of Millions in Premiums
Covered California health plans decreased their proposed 2015 rates, saving consumers tens of millions of dollars in potential premiums, according to a study in the Journal Health Services Research. Researchers analyzed state data on health care use by Covered California enrollees. Many were healthier and presented less risk to insurance companies than anticipated, helping drive down the cost of health premiums through the exchange in 2015. The study was conducted by researchers from the University of California, San Francisco, the Department of Health Care Services, and actuaries at Covered California. For more information, visit www.CoveredCA.com.
EPIC Launches Private Exchange Platform
EPIC Insurance Brokers and Consultants unveiled a private exchange, The EPIC Exchange Platform (EXP) in partnership with Atlanta-based Hodges-Mace, LLC. The integrated offering includes benefit administration and enrollment, a licensed call center, and actuarially based decision support tools. A flexible technology platform allows for multi-year strategy – beginning with core benefit administration and the option to migrate to full private exchange and defined contribution approach without disruption. For more information, visit epicbrokers.com.
Employee Benefit Guidance Tool
MassMutual launched an employee benefit guidance tool to help Americans make decisions about their financial needs. MapMyBenefits helps employees prioritize their health care, insurance and retirement benefits, and make the most of each benefit dollar based on their life stage, financial goals and financial situation. For more information, visit massmutual.com.
Android App for Easy Access to Benefits
PlanSource released a version of its mobile app for Android smartphones. The mobile app provides quick and easy access to benefit information, and allows users to share their ID cards, store important healthcare contacts. and get benefit notifications from employers. The app is now available for a free download in the Google Play Store. For more information, visit plansource.com.
How Technology Improves Revenue and Productivity
Agencies that rely heavily on sales and marketing technology have 43% more revenue growth and sell up to 13% more insurance policies per producer/per household, according to a study by Velocify. The survey of more than 1,000 insurance agencies includes the following key findings:
- Agencies that use lead management software sell 43% more insurance policies per producer and 13% more per household.
- Agencies that use automated dialers sell 43% more policies per producer and 7% more per household.
- Agencies that use consumer relationship management (CRM) software sell 15% more policies per producer, but sell 11% more policies per household.
- Agencies that use marketing automation sell 10% more policies per household.
Despite these benefits, use of these tools remains relatively low across all types and sizes of insurance agencies. For example, more than 70% of independent agencies don’t use automated dialers. Only about 70% of agencies with more than 100 employees use lead management software. Agencies with significant revenue growth are 34% more likely to say they plan to increase technology investments compared to agencies with declining revenues. Direct-to-consumer agencies are 26% more likely to say they plan to increase their technology investment compared to independent agencies. Larger, more successful agencies tend to be more frequent users of sales and marketing technology. Their investment in these tools is likely to grow, compared to smaller agencies and to those whose revenues are stagnant or shrinking. For more information, visit velocify.com.
Webinar on Provider directories
The California HealthCare Foundation will be sponsoring a webinar on July 6 from 11:00 AM to 12:00 PM Pacific Time: “Creating Effective Integrated Provider Directories: Lessons from Four States.” For more information, visit chfc.org.
NAHU Convention in New Orleans
The National Association of Health Underwriters (NAHU) will be holding its Annual Convention June 29 in New Orleans. It will focus on helping health insurance professionals serve clients amid the legislative and regulatory changes affecting the health insurance market. Presenters will review of the Supreme Court ruling on King v. Burwell. For more information, visit nahu.org.
Retirement Income Conference
OneAmerica will be the title sponsor of the 2015 Retirement Income Industry Association annual conference in Indianapolis from September 16 to 18. The event will feature emerging retirement income trends, modern portfolio theory, life insurance, investment management, challenges facing women, Social Security, Medicare, and retirement healthcare costs. For more information, visit riia-usa.org.
FSA Trends and Success Stories
The Healthcare Trends Institute is holding a webcast on employer preferences with flexible spending accounts. It will be held Thursday, July 16, 2015 at 9:30 a.m. Pacific Time. For more information, visit healthcaretrendsinstitute.org.