by Jane Anderson
Florida's health insurers remain highly profitable as the
overall market has grown significantly more concentrated, with companies such
as Anthem, Inc. and Florida Blue snapping up numerous smaller HMOs over the
past several years, particularly in the Medicare Advantage (MA) space, says the
author of a new report on the Florida market.
Independent analyst and consultant Allan Baumgarten, who studies
state health care markets, tells AIS Health that he expects consolidation to
continue.
"There is a new crop of insurers that started business in
2019, including some new Medicare Advantage plans, plus Bright Health and Oscar
[Health Insurance]," Baumgarten says. "I think that the Medicare
Advantage plans, if they grow to a certain threshold size — maybe 25,000 enrollees
or more — will be targets for acquisition. In fact, I think some of the
entrepreneurs that started those new plans [did so] as a build and then sell
strategy."
Baumgarten's report, which looked at enrollment, profitability
and acquisitions in 2018, found that HMOs enjoyed strong profits in 2018
despite enrollment that slipped around 2.2%, mainly as a result of fewer people
in Medicaid HMOs.
"For the health plans, two lines of business have been
especially profitable — Medicare Advantage, consistently for the past eight
years or more, and individual health plans [including exchange coverage] in the
past two years," Baumgarten says.
"The premiums paid to Medicare Advantage plans in Florida
are among the highest in the country, which is why health plans are eager to
start or acquire Medicare plans here," the report explains.
Insurers weren't the only health care players pursuing mergers
and acquisitions in 2018, says. Overall, the report spotlights "growing
consolidation on both the hospital system and health insurer sides, leading to
strong profitability for both hospitals and health plans," Baumgarten
says.
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