Illinois Managed Care Review 2005

Illinois Managed Care Review 2005 finds:

Illinois Pushes Health Care Envelopes on Three Central Issues

Chicago - Illinois is leading the states in taking on three core health policy issues. First, the state is ahead of other states in promoting initiatives to guarantee health coverage for almost all children. Second, public officials are challenging nonprofit hospitals to do more to fulfill their charitable missions and benefit low-income and uninsured families. Third, after years of decline, there is new interest and growing activity in managed care plans for seniors and Medicaid recipients.

These findings and others are reported in Illinois Managed Care Review 2005, Allan Baumgarten's ninth annual analysis of the Illinois health care market. The report, released here this week, presents a competitive analysis of health plans and hospitals in the state.

Baumgarten is an independent analyst of health care finance and policy, based in Minnesota. He also publishes annual market studies on managed care in eight other states. GlaxoSmithKline has provided support for his Illinois report since it was first published in 1997.

Among the report's findings:

HMO enrollment continues to decrease, although the rate has now moderated

HMO enrollment in Illinois reached a peak of 2.4 million in 2000. Enrollment decreased by 158,000 lives in 2004 (8.3%), dropping to 1.7 million. This was the first time since 1994 that Illinois enrollment fell below 1.8 million. Enrollment also dropped in the first half of 2005, but only by 1.7%. Most of the enrollment has been lost in HMO employer plans, as group move in PPOs and similar plans with more enrollee cost-sharing.

Medicare HMO plans are highly profitable and poised to add members

Humana has been joined by three more HMO senior plans, sponsored by Aetna, WellCare (the Harmony HMO) and HealthSpring, a Nashville-based company that started an Illinois health plan.

HMO premium revenues increased at double-digit rates for the fourth straight year

On average, HMOs collected $225.26 per commercial member (employer groups) per month $203.86. That was an increase of 10.5%, following increases of 12.3% in 2003 and 16.5% in 2002. HMOs have increased their profitability with four or more years of double-digit revenue increases. Even though Illinois HMOs face strong upward pressure on their medical costs because of increased utilization

HMO profitability in Illinois is stronger than ever.

For the third year in a row, Illinois HMOs made money on their operations (before taxes and investment income). As a group, Illinois HMOs posted net income of $208.2 million or 3.2% of revenues, up from $126.6 million, or 2.0% of revenues in 2003 and from $77 million in 2002.

Chicago area hospitals significantly improved their financial results.

Based on an analysis of Medicare facility cost reports, Chicago area hospitals had net income of $322.2 million in 2004, 2.3% of net patient revenues, up from $263.7 million in 2003, which was 2.0% of net patient revenues.