While some folks eagerly await the release of a summer blockbuster movie or the latest iPhone, others can’t wait to get their hands on the new data the Atlantic Information Services (AIS) publishes each year on the health insurance industry. So, when AIS, which is one of the most authoritative sources on the industry, finally released their 2016 Directory of Health Plans, we were very excited to see what the numbers would reveal.
Before we dig into the findings, a note about the data. This year’s report was delayed so that the data compiled is through January 1, 2016. In prior releases, the reporting dates varied because the survey was compiled between October and December. A consequence of this change is that the report is now published in June instead of April. This change, however, is a positive one as it will result in more consistent and likely more accurate reporting.
Two key trends stood out this year.
- Provider-sponsored plans are on the rise. The total number of these plans increased from 256 in 2015 to 268 in 2016. Membership in these plans jumped from 32.8 million to 36.3 million. This means that three-quarters of total membership growth was driven by provider-sponsored plans, which now provide coverage to 12 percent of all members.
- There is a shift from group coverage to individual plan membership, which grew almost 4 percent from 16.1 to 16.7 million.
At a high level, the AIS data shows that total membership in health plans increased 1.6 percent from 294 million to 299 million between 2015 and 2016. This is double the population growth rate of 0.8 percent, which indicates that more Americans are getting health insurance coverage as a percentage of the population. This data is not surprising given the increase in the number of covered Americans as a result of the Affordable Care Act.
Commercial plan membership declined from 89 million to 88 million. This was driven by a drop in commercial risk membership from 64 to 62 million. One might think that this was compensated for by increased ASO/Self-Funded business. However, membership was flat at 117 million. Overall this indicates a shift away from group coverage to individual plan membership. This trend may accelerate in future years as members with group coverage migrate to individual plans.
The House of Representatives just passed the Small Business Health Care Relief Act. This legislation would remove penalties from small businesses that currently prevent employers from reimbursing employees on a pre-tax basis for individual health premiums. If the bill becomes law, it would likely accelerate the group-to-individual coverage migration.
In parallel with the decline in commercial coverage, there was a drop in the number of plans offering commercial risk products from 236 in 2015 to 223 in 2016. Much of this was due to the demise of ACA Co-ops that were hit hard by underfunding of the risk corridor adjustments in the fall of 2015. The AIS data supports what we have been seeing in the market this past year.