Priority Health’s piece growing in small market

June 18, 2010
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Priority Health has edged ahead of Blue Care Network in market share in the shrinking small employer health insurance market, according to the state Office of Financial and Insurance Regulation's annual report.

Michigan Insurance Commissioner Ken Ross noted that Grand Rapids-based Priority Health accounted for 11.6 percent of member-months in 2009, compared to 10.8 percent for Blue Care Network. The report was issued in May.

Blue Cross Blue Shield of Michigan remains solidly in the lead in the small group market, with a 41.8 percent share of member-months.

"Two entities, Blue Cross Blue Shield of Michigan and Blue Care Network, had consistently held the number one and two ranks (respectively) of 80 percent of the market share from 2003 through 2008; however, based on this measure of market share, Priority Health is the second ranked carrier, followed closely by Blue Care Network," Ross stated in the report.

The insurance commissioner has provided the annual report since 2003 as required by the legislation that reformed the small group market in the same year.

SMALL EMPLOYER
GROUP MARKET 2009

 


Company 

Blue Cross Blue Shield
Priority Health
Blue Care Network
U.S. Health and Life Ins.
Humana
Priority Health Ins. Co.

Share of
Member Months
41.8 %
11.6 %
10.8 %
8 %
3.5 %
3.1 %

Source: Michigan Office of Financial and Insurance Regulation
Rick Murdock, executive director of the Michigan Association of Health Plans, said Priority Health has capitalized on its 2007 acquisition of Care Choices from Trinity Health to add members in southeastern Michigan.

"A large part of Care Choice enrollment was in the small market, so by putting those two together, I think obviously they are a player in the small market and their member-months reflect that," Murdock said.

Priority Health CMO Joan Budden concurred.

"Part of that is due to our regional diversification, entering the eastern Michigan market, and we saw a fair amount of growth there. We also continue to grow in the Traverse City area and across the top of the state, despite the downturn."

Blue Cross Blue Shield of Michigan also may be picking up some former customers of its BCN subsidiary, Murdock said.

The report showed that Priority Health edged out BCN in three metrics: member-months, number of lives insured and losses paid.

The report notes that over the years, the number of companies that have spots in the top 80 percent of market share has increased from five to seven. Ross concludes that "there is a reasonable degree" of competition.

In a written statement, BCBSM said, "We think it is important to point out that the OFIR report concluded that Michigan remains a competitive small group insurance market."

Murdock said that Priority Health has gained a slight edge in a market that has dwindled dramatically.

Member-months totaled 8.3 million in 2009 for the entire market, according to the report. Murdock said that the market is more than 40 percent smaller than it was seven years ago.

"When we first started these reports as a result of small market reform, we were looking at a small market that had nearly 1.3 million enrollees or beneficiaries … about 14.7 million member-months," he said. "When you look at the overall market now in terms of grand totals, we are down now in the small market to about 8.3 million member-months, and that translates to a little over 720,000, maybe 725,000, covered lives.

"What is happening behind the scene is the small market itself is changing."

The economic downturn has played a major role in that change, Murdock said. "It's the transition of employer-based insurance. It's companies going out of business and no longer being able to provide coverage, people moving on to the individual market or simply to uninsured."

Budden said that Priority Health has experienced customers that have gone out of business or have eliminated health coverage for employees.

Plus, Michigan's population is shrinking as people leave a state with a 14 percent unemployment rate, Murdock said.

"The overall base is significantly different in a short period of time," he said. "If I'm any of the carriers in small market, I'm looking at how am I building up in the individual market, how am I protecting or sustaining with the large corporations, and I'm looking whether or not I am going to participate or continue to participate in the governmental programs Medicaid and Medicare."

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