Medicaid expansion under the Affordable Care Act was the primary driver of growth in health insurance industry Medicaid revenues in 2014, according to a new report from Fitch Ratings.
Specifically, Medicaid expansion under the ACA drove 31 percent growth in health insurance industry Medicaid revenues in 2014, outpacing the 18 percent five-year average between 2010 and 2014. Currently, 30 states are actively participating in Medicaid expansion, which significantly increased both eligibility for and federal funding of Medicaid, according to Fitch.
Here are five other Medicaid takeaways from the report.
1. Medicaid revenue. Growth in Medicaid revenue among the top five insurers was robust in all cases over the past five years, but varied more between carriers because of a mix of acquisition and organic growth, according to Fitch. Centene increased the most among the top five Medicaid writers with an annual growth rate of nearly 32 percent between 2010 and 2014. Future growth in Medicaid revenue will depend on whether more states decide to expand Medicaid, which Fitch notes will largely be determined by the U.S. political climate after the 2016 presidential election.
2. Medicaid vs. Medicare. In general, from 2005-2014, Medicare business was more profitable than Medicaid business until the ACA phased in reimbursement reductions. "The Medicaid business is modestly profitable and experiences low volatility and historically has been less profitable than Medicare, however with Medicaid expansion and reimbursement reductions under the Affordable Care Act, Medicare and Medicaid are starting to achieve profit parity," Doug Pawlowski, senior director with Fitch, said in a prepared statement.
3. Largest Medicaid insurers. The five largest Medicaid insurers measured by net written premiums are:
- UnitedHealth Group
- Anthem
- Centene
- Molina Healthcare
- WellCare Health Plans
4. Medicaid insurer premiums. In total, the five largest Medicaid insurers accounted for nearly half of the greater than $115 billion in total Medicaid premiums written in 2014, according to Fitch.
5. Underwriting margins. Four of the five largest Medicaid writers reported better than industry average Medicaid underwriting margins from 2010 to 2014, according to Fitch.
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