Small, medium payers show growing interest in provider-sponsored plans
Small and medium business (SMB) payers make up a combined 83% of health plans, but they are often overlooked, according to a new Edifecs white paper on the topic.
SMB plans showed little overall growth over the past five years, as the total number inched up from 402 to 409, but membership declined by 100,000 people. The SMB market has experienced "significant churn" with turnover in the market from mergers, acquisitions and closures, according to the paper.
One trend in the SMB market is a move toward provider-sponsored health plans, which have increased by 13% since 2013. The move to provider-led or provider-owned plans comes as the industry creates more value-based care and payment reform models. More than 90% of provider-sponsored plans are in the SMB market despite being only 46% of all health plans.
The Affordable Care Act exchanges and larger employers drive much of the discussion about health insurance, but the new white paper argues that smaller payers also play an important role. That is shown in the trend toward value-based models and efforts to work more closely with providers — both of which are major goals for the industry as a whole.
Mary Swaykus, senior analyst at Edifecs and the paper's author, analyzed five years of data on the SMB market to look at its growth, consolidation and competitive landscape. Swaykus reviewed 409 payers in the segment, which made up 83% of all health insurance plans but only 11% of covered lives.
Large payers, defined as 500,000 or more covered lives, provide coverage for about 291 million Americans. Those payers make up only about 17% of health insurance companies. Small payers, which cover fewer than 50,000 people, make up 49% of the market. Medium businesses, between 50,000 and 499,000 people, account for 34%.
There were 111 new entrants in the SMB market over the past five years with 104 exits through consolidation and acquisition (50 plans) and closure (41).
The report found that only 33% of SMBs offer commercial risk plans and more than half of those plans are administrative services only. Commercial risk and ASO payers make up about half of SMB payers, but only account for 13 million lives.
That’s in comparison to 87% of SMB payers that offer a government plan, such as Medicare Advantage, Medicaid and dual eligibles. Government plans make up 23 million lives or 64% of total SMB membership. Dual eligibles, MA and Medicaid are the most common lines of business for SMBs.
However, SMBs have been losing MA membership, dropping 40% since 2013 and now only covering 2.5 million people. During the same time, major players like UnitedHealth Group and Humana have increased their MA footprint.
The paper said the SMB market is "constantly evolving" and offered a prediction.
"As more provider groups embrace value-based care, we can expect this number to continue to grow in the coming years. Additionally, we can expect to see more consolidation of plans and shifts in lines of business offered as payers attempt to meet growing market demands and accommodate changes in government regulations," according to the report.