OLDWICK, N.J.--(BUSINESS WIRE)--Medicaid has been one of the material sources of the health insurance industry’s growth in recent years and, given the recent expansion of the program by many states, it will continue to help the segment develop, according to a Best’s Special Report titled “Location Is a Crucial Factor for U.S. Health Insurers’ Growth from Medicaid Expansion.”
During the past decade, the number of eligible individuals under traditional Medicaid income eligibility requirements has increased across the country. The economic downturn and high unemployment drove natural growth for health insurers that operate in the Medicaid industry. Most recently, their growth is being driven by factors related to the Affordable Care Act (ACA) and the expansion of Medicaid income eligibility requirements by more than half of the states.
An analysis of enrollment data, from annual and quarterly statutory statements for health insurance filers, shows that Medicaid enrollment grew more than 4% in 2013 and nearly 9% in 2012. Moreover, it surged by almost 23% in the first half of 2014, compared with 3% in the first half of 2013.
While year-over-year growth appears to be very pronounced industrywide, the actual rate of enrollment and revenue growth for an insurer’s Medicaid line of business will depend on where it writes business. The report notes that earnings in the Medicaid business is more volume than margin driven, giving insurers with greater market share of the insured population the ability to generate greater earnings on an absolute dollar basis.
For a full copy of this special report, please visit: http://www3.ambest.com/bestweek/purchase.asp?record_code=230746.
This report originally appeared in Best’s Journal, dated Nov. 10, 2014. Best’s Journal is a biweekly publication that presents A.M. Best’s original research, analysis and commentary on the global insurance
industry, and is available exclusively as part of a subscription to the Best’s Insurance News & Analysis service. More information about the Best’s Insurance News & Analysis subscription service is available at www.ambest.com/sales/bina/default.asp.
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