Thirty-seven provider-sponsored health plans have formed since 2010, and only four were profitable in 2015.
An historical analysis of provider-sponsored plans finds a difficult market led to heavy financial losses and plan exits.
Few new plans have gained enough enrollees to effectively manage risk, achieve economies of scale in plan administration, or have an impact on competition and price in their local markets.
Since 2010, of the 37 new health insurance companies and five acquired health plans, only four were profitable in 2015, five have gone out of business, and two are in the process of being sold.
Researchers find the current health plan environment is not conducive to profitability for new provider-sponsored plans. Given proposed cuts to Medicaid and changes to individual plans in the American Health Care Act, the future of the remaining provider-sponsored plans could face even greater uncertainty.
About the Author
Allan Baumgarten is an independent research analyst whose work focuses on health care policy, finance and local market strategies. He publishes Minnesota Health Market Review and reports in eight other states analyzing trends and strategies for health care payers and providers. He works with a variety of organizations to help them analyze the market competition and policy issues they face and to develop business strategies to meet the challenges of dynamic markets and health reform. His clients include health plans, provider organizations, government agencies and manufacturers of pharmaceuticals and other health products and services. For more information, visit www.allanbaumgarten.com.