#United States #Health Insurance #profitability #Mark Farrah Associates #MCMURRAY

Overview

In a recent analysis conducted by Mark Farrah Associates (MFA), trends in the profitability of the Individual and Small Group health insurance segments have been scrutinized, focusing on aspects such as membership, per-member per-month (PMPM) claims, and adjusted premiums. As the healthcare landscape evolves, understanding these metrics becomes essential for stakeholders in the insurance industry.

Membership Trends

The Individual segment of the healthcare market showcased a remarkable growth trend, with enrollment rising by an impressive 21%. This surge brought the total number of members in 2024 to approximately 21.5 million. This increase in membership can be attributed to several factors, including heightened health awareness and the ongoing impacts of public health initiatives.

Conversely, the Small Group segment faced challenges as it experienced a decline in membership, dropping by 7%, resulting in a total of 7.9 million members in 2024. This decline is indicative of the shifting dynamics in employer-sponsored health insurance, where many small businesses are grappling with rising costs and are potentially seeking alternative coverage options.

Claims and Premium Analysis

Examining the claims incurred PMPM, the report highlighted a modest increase in average medical claims for the Individual segment, which rose to $493 in 2024—an increase of 2.3% from the previous year. This uptick aligns with general trends in healthcare costs, where the demand for medical services continues to expand, partly driven by the aging population and the increase in chronic health conditions.

On the premium side, individual segment premiums also saw a slight increase of 1.8%, bringing the average PMPM premium to $559. This stability in premiums, juxtaposed against the rising claims, indicates a probable lift in overall profitability for insurers servicing individuals, thereby suggesting a healthy operational framework in this segment.

In contrast, the Small Group segment reported average claims incurred PMPM escalating by 8.4% from $495 in 2023 to $537 in 2024. This significant increase poses challenges for insurers that may need to adjust premiums significantly to maintain profitability in the face of rising claims expenses.

Medical Loss Ratios (MLRs)

In analyzing the Medical Loss Ratios (MLRs), the report found that both segments experienced increased MLRs from 2023 to 2024. A higher MLR denotes that a greater proportion of premium revenue is directed towards medical care rather than administrative expenses, which can suggest a focus on improving care quality.

The profitability of both segments over the last five years, as articulated in the MFA report, indicates a nuanced picture where individual health plans are reaping benefits from increased enrollment, stabilized premiums, and a manageable increase in claims. In contrast, the Small Group segment continues to face downward pressures that could further affect its viability unless strategic alterations are made.

Conclusion

Mark Farrah Associates continues to provide invaluable insights into the health insurance industry, ensuring that stakeholders are well-informed of the current trends impacting their operational success. For those interested in a deeper understanding of these insurance markets, MFA offers a detailed report titled "An Analysis of Profitability for the Individual and Small Group Health Insurance Markets in 2024," available through their website. Understanding such trends and metrics not only aids insurance providers but also helps consumers grasp the evolving landscape of health coverage as they navigate their choices in this critical sector of public health.