Among the carriers that offer fully insured health plans, overall the top line has prospered while the bottom line has deteriorated since the enactment of the Affordable Care Act -- but the largest plans have fared much better than others, according to the study, "Health Plan Financial Trends 2011-2016," by the Deloitte Center for Health Solutions.

Industry-wide, revenue for fully insured health insurance products rose 55 percent, from $548 billion in 2011 to $849 billion in 2016. Enrollment increased by 29 percent during this period, from 143 million to 184 million members. However, underwriting gains and margins declined during this period. In 2011, U.S. fully-insured health plans posted aggregate underwriting gains of $19.2 billion. In 2016, underwriting gains were $13.6 billion, a decline of 29 percent from 2011 levels. The sector’s overall 2016 underwriting margin of 1.6 percent was 52 percent below the industry’s aggregate 3.5 percent margin in 2011.

Deloitte defines “fully insured plans” as medical coverage by insurance companies that assume the risk, in exchange for premiums by employers and other sponsors -- – as opposed to self-insured plans or plans under “administrative services only” contracts.

At the company level, there was a significant increase in the number of fully insured plans with annual losses, a steep decline in average margins, and widening variation in performance among plans. These unfavorable trends emerged largely in 2014, the initial year of major coverage expansions under the ACA.

“In 2014 and 2015, nearly half of fully insured health plans reported underwriting losses,” the authors write. “While the number of health plans with losses moderated somewhat in 2016, the number and proportion of those with losses remains higher than pre-2014 levels.”

The largest health plans captured “a disproportionate, and growing” share of industry-wide underwriting gains, according to the report.

The three largest plans by revenue in every year from 2011 through 2016 were UnitedHealth Group, Kaiser Foundation Health Plan and Anthem. Their share of underwriting gains rose significantly, even as their share of enrollment and revenue moderated over the study period. In 2016, the top three generated 84 percent of all underwriting gains in the fully insured market, compared to 55 percent in 2011. Their share of enrollment declined to 30 percent in 2016, from 33 percent in 2011. Their revenue share also declined, to 34 percent in 2016 compared, to 36 percent in 2011.

The Top 10 plans by revenue varied somewhat from year to year between 2011 and 2016. Beyond the top three, the following five health plans remained in the Top 10 in each of the six years of Deloitte’s analysis: Aetna, Centene, Cigna, Health Care Service Corp., and Humana.

The vast majority of health plans in the U.S. fully-insured market are relatively small, with more than 70 percent posting annual revenue of less than $2 billion, according to the report. The financial performance of most of these smaller health plans is close to break-even.

The study also found that for-profit health plans grew faster and posted significantly higher margins than not-for-profit health plans. For-profit plans saw revenue jump by 60 percent between 2011 and 2016, while not-for-profit plans had a revenue increase of 49 percent during the same period. For-profit plans had an average margin in 2016 of 2.5; the non-profit margin was 0.8 percent in 2016.

Lastly, the study revealed state insurance markets experienced increased volatility. There was a marked increase in the number and variety of states with unfavorable swings in insurance market performance, with the performance of health insurance markets in many states deteriorating significantly.

“Our study shines a brighter light on the many U.S. health plans that have struggled financially, particularly since 2014, in a disrupted and highly competitive market,” the authors write.

“Many -- but not all -- of the health plans posting underwriting losses are smaller-scale companies, often nonprofits, which lack the financial resources to withstand many more ‘bad years,’” they add. “Many of these health plans play critical roles in their local communities and health care ecosystems; their financial prospects warrant continued attention.”

Instant Insights /

Revenue from fully insured health products hit $849 billion in 2016

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