Confidential Briefing - Health Forum Edu keckley.pdf · 08/07/2015 · CIGNA Corporation (CI) ......
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Confidential Briefing Understanding the Trends Shaping the Health Insurance Market July 24, 2015 AHA Leadership Summit San Francisco, California Navigant Center for Healthcare Research and Policy Analysis Paul H. Keckley, PhD., Managing Director
Transcript of Confidential Briefing - Health Forum Edu keckley.pdf · 08/07/2015 · CIGNA Corporation (CI) ......
Confidential Briefing Understanding the Trends Shaping the Health Insurance Market
July 24, 2015 AHA Leadership Summit San Francisco, California Navigant Center for Healthcare Research and Policy Analysis Paul H. Keckley, PhD., Managing Director
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Context: Investor Confidence in Sector
Source: CSIMarket Company
Accident & Health Insurance Industry (Q1 2015) Price to Earning ratio is 17.34
S&P 500 current P/E is 18.48 The aggregate P/E Ratio for companies in this space is 34.4 (diluted) and 29.8 (normalized).
Price to Sales ratio is at 0.8 Price to Cash flow ratio is at 13.28 Price to Book ratio is 2.58
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Context: Investor Confidence in Sector
COMPANY NAME PE PRICE TO SALES PEG PCF PRICE TO BOOK
Aetna (AET) 12.21 0.69 0.19 - 2.68
Anthem, Inc. (ANTM) 16.52 0.6 0.64 - 1.84
CIGNA Corporation (CI) 19.6 1.12 1.37 116.57 3.66
HUMANA INC. (HUM) 23.91 0.56 2.43 100.06 2.83
UnitedHealth Group Incorporated (UNH) 20.27 0.88 1.78 104.76 3.73
Source: CSIMarket Company
Health Insurance Industry
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Context: Investor Confidence in Sector
COMPANY NAME PE PRICE TO SALES
Pfizer Inc.(PFE) 24.01 4.43
Merck & Co. 15.09 4.03
Celgene Corporation (CELG)
41.18 12.55
Bristol-Myers Squibb Company (BMY) 51.62 7.25
Abbott Laboratories (ABT) 16.49 3.61
Note: Novartis, Roche and Sanofi not included in database Source: CSIMarket Company
COMPANY NAME PE PRICE TO SALES
Aetna (AET) 12.21 0.69
Anthem, Inc. (ANTM) 16.52 0.6
CIGNA Corporation (CI) 19.6 1.12
HUMANA INC. (HUM) 23.91 0.56
UnitedHealth Group Incorporated (UNH) 20.27 0.88
Health Insurance Industry Major Drugs Industry
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Context: The Structure of the U.S. Health Insurance Market
U.S. Census Bureau Data, up to Dec. 31, 2013 United States Census Bureau. “Health Insurance in the United States: 2013”. Retrieved online on 7/8/2015 at https://www.census.gov/hhes/www/hlthins/data/incpovhlth/2013/tables.html
Private Health Insurance premiums
reached $961.7 billion in 2013 (33 % of national health
spending).
Private insurers provide services to 258 million of the 313 million
U.S. population
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Context: Changes in the U.S. Health Insurance Market 2010-2013
Increased coverage in Medicaid, Medicaid, and individual plan markets
Decreased coverage by employers
Source: All the data is extracted from “Income, Poverty and Health Insurance Coverage in the United States”, an annual survey by the US Census Bureau.
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Government PSHP Market Share vs. Payer Market Consolidation (2013)
Commercial PSHP Market Share vs. Payer Market Consolidation (2013)
Relatively More Payer Competition
Relatively Less Payer Competition
Relatively More Payer Competition
Relatively Less Payer Competition
Lower Market Shares
Higher Market Shares
More Payer Competition
Legend: Size of the bubble indicates member size
Context: Current Payer Concentration
Markets dominated by one plan (more than 50% of market): In 2010, 30 states had three insurers with at least 80% of enrolled lives in the individual sector. That number rose to 38 states by 2013.
Context: CMS Shifting Risk to Providers
FFS All Services
Full
Degr
ee o
f Fin
ancia
l Risk
Degree of Clinical and Administrative Integration
Full Risk Capitation
ACOs
FFS + P4P
Bundled Payments
PCP
Shared Savings
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Provider Sponsored
Plan
Continuum of Provider Sponsored Risk
Phase 1: 870 participants Phase 2: 105 participants
426 Medicare ACOs
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Context: the new ‘Big Three”
Rank Company Premium %
1 UnitedHealth Group Inc. $115,302,000 20.21%
2 Anthem Inc. $68,389,300 11.99%
3 Aetna Inc. $49,562,000 8.69%
4 Humana Inc. $45,959,000 8.05%
5 Cigna $27,214,000 4.77%
Total Premiums for Health Insurance $570,576,663
Source: “State Insurance Regulation: Key Facts and Market Trends 2014”. Company premium data extracted from 2014 Financial Statement.
Premiums controlled by leading plans
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Trend: Increased Market Concentration Enrollment Share for the Three Largest Insurers, Name and Enrollment Share for the Largest Insurer, and Total Number of Insurers by State and Market Segment, 2013
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Trend: Managed Medicaid Total Medicaid MCOs 2014
39 states contract through private Medicaid MCOs In most states, plans compete for this business Margins in Medicaid are half commercial margins
Source: Kaiser Family Foundation, State Health Facts
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Trend: Increased risk sharing with providers
Source: “Aco update: a slower pace of growth” Oliver Wyman http://www.oliverwyman.com/content/dam/oliver-wyman/global/en/files/insights/health-life-sciences/2015/ACO-Update-2015-v2.pdf
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Trend: Consolidation
Aetna – Humana Deal: What to expect
» AHIP budget down 30% from 2010 to $63 million » United HealthGroup withdraws membership in AHIP » Aetna calls itself an HIT company
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Trend: Diversification
» Increased market concentration » Increased risk sharing with providers » Increased growth in Medicaid, Medicare Advantage » Increased consolidation » Increased diversification
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Summary Key Trends
» Increased plan leverage in certain markets & regions
» Expanded plan-sponsored access to clinical + financial data re: performance
» Growing affinity with consumers via retail health, B2C models
» Increased disruption in physician relationships
» Increased regulatory scrutiny of premiums, compliance
» Strategic positioning of plans, employers re: plans, private exchanges, healthcare.gov
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Implications for hospitals & health systems…
Paul H. Keckley, PhD., Managing Director Navigant Center for Healthcare Research and Policy Analysis, Washington, DC. [email protected] 312-583-4113
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For more information:
