Managed care, once touted as the solution to rising costs and better delivery of care, continues to undergo a transformation in California. Enrollment in Medicare HMOs fell during the past year, in spite of the Government’s desire to enroll seniors in managed care plans. At the same time, enrollment in commercial, Medi-Cal, and Healthy Families plans grew.  However, at the county level, enrollment growth was not consistent across the plan types as HMOs opted out of selected counties or market penetration levels declined.   Overall, the Cattaneo & Stroud, Inc. 2001 Survey reveals more Californians than ever chose HMOs for their health plan coverage in 2001. 

KEY FINDINGS OF THE YEAR 2001 CATTANEO & STROUD HMO SURVEY

• More than one-half of Californians are HMO enrollees.
• Commercial, Medi-Cal and the Healthy Families plans experienced a combined enrollment growth of 5.3% from 2000 to 2001.
• Enrollment in Medicare HMO plans fell1.5% from 2000 to 2001.
• HMO enrollment is highly concentrated within five health plans with growing enrollment levels.
• Fewer plans offered coverage than five years ago.
• Nine of California's fifty-eight counties constitute more than three quarters of HMO enrollment.

THE CATTANEO & STROUD SURVEY

For the last five years, Cattaneo & Stroud, Inc.

(C & S) has surveyed HMOs active in California and analyzed enrollment by county and line of business (commercial, Medicare, Healthy Families, and Medi-Cal).  Active plans include HMOs with a Knox-Keene license, Department of Health Services Medi-Cal plans, and CMMS Medicare plans.  Fifty plans were included in this year’s survey, with enrollment data from March 2001. 

As far as we know, the C & S survey is the only source of data on county-specific enrollment in California for all types of prepaid commercial, Healthy Families, Medi-Cal, and Medicare plans.

Although HMOs in California are required to report enrollment to state regulators, they do not have to detail enrollment by county.  The State’s aggregated data are not helpful for understanding local market dynamics. 

SURVEY FINDINGS

q Californian’s enrollment in HMOs continues to rise with 18.3 million residents now covered, a million more than in 2000.

q More than one-half of Californians are enrolled in HMOs.

q Fewer Medicare eligibles have HMO coverage than one year ago.

q  Only the Medicare segment experienced a decline in HMO enrollment levels.  Across nearly all product segments, fewer plans offered coverage.

- Between 2000 and 2001, the Medicare eligible population increased by 2.1% while those enrolled in HMOs decreased by 1.5%.

• In 2001, twenty plans served the Medicare segment, down from twenty-two plans in 2000.
• Between 2000 and 2001, Medicare enrollment declined in forty counties.

- The commercially eligible population grew by 1.3% over the past year, while the commercial population enrolled in HMOs increased by 3.9%.

• Twenty-six plans served the commercial population in 2001, as compared to twenty-seven plans in 2001.

- The Medi-Cal population experienced an overall growth of 1.3%, with an HMO enrollment increase of 6.9%.

• In 2001, thirty-five plans enrolled Medi-Cal eligibles, the same as 2001.

- The Healthy Families Program enrolled 149,972 additional children over the past year, with eligibles enrolled in twenty-four plans, down from twenty-five in 2001. While no specific eligible population exists for the Healthy Families Program, there is assumed to be additional opportunities for growth in this product segment.

q  HMO enrollment remains highly concentrated in five health Plans, each with growing enrollment levels.

Overall, five plans account for 75% of California’s HMO enrollment: Kaiser, Blue Cross/CaliforniaCare, PacifiCare/FHP, HealthNet/Foundation, and Blue Shield. 

- All of these large plans experienced enrollment growth between 2000 and 2001.

q  Fewer plans are offering coverage in the State than four years ago.

- In 2001, fifty plans offered prepaid coverage in at least one product segment in at least one county.  This has declined from a high of fifty-nine plans in 1998 and 1999.

- C & S anticipates this number to decline further based upon announcements of additional product and geographic withdrawals by health plans since March of this year.

q There was wide disparity between the commercial and Medicare segments in enrollment gains and losses across the State.

- While fifty of the state’s fifty-eight counties experienced an overall gain in HMO enrollment levels between 2000 and 2001, growth rates varied significantly between the Medicare and commercially insured populations.

• Forty-eight counties experienced a gain in commercial product enrollment, while only ten counties recorded a decrease in commercial HMO enrollees.
• In the Medicare product segment, forty counties experienced a loss in enrollment; only eighteen experienced gains in enrollment.
• The Healthy Families Program experienced growth in all counties across the state.
• Nearly as many counties experienced a decline in Medi-Cal enrollments as those experiencing an increase.  

Given the State’s population concentration in a small number of counties and higher rates of enrollment growth in the urban markets, more than three-quarters of Statewide HMO enrollees reside within nine counties.

- Within these nine counties, HMO members represent a very large share of the population.

OBSERVATIONS AND DISCUSSION

The C & S HMO Survey can be used for a variety of planning, marketing, and managed care contracting strategy and decision-making processes.  It provides a wide range of detailed and specific information that is fundamental to each sector of the health care industry.

The survey also raises some interesting questions about the future of managed care.

• Does the increasing enrollment growth in the commercial HMO market segment suggest employers believe that these plans are most cost-effective or are they the easiest options to administer?
• What impact will loss of Medicare HMO plan options have upon seniors’ interest in potentially re-joining these plans in the future?
• Will the federal government provide additional funding for Medicare HMOs to achieve their stated policy direction of enrolling seniors in prepaid health plans?
• Does growing enrollment in Healthy Families and Medi-Cal plans present new opportunities for some providers or payers?