Medicaid Market Growth Opportunities

The Medicaid market could be the silver lining in the economic storm cloud that has settled over health plan enrollment in the U.S. according to research conducted by Mark Farrah Associates (MFA), a leading provider of market data and intelligence solutions. Faced with increased unemployment and a continued decline in the employer-sponsored healthcare market, major players such as UnitedHealth are looking to the Medicaid market to help offset projected losses in commercial membership in 2009.

Since the current recession began in December 2007, the U.S. economy has shed 5.7 million jobs. That drop translates into lost commercial membership for health plans as job-based healthcare coverage disappears. Meanwhile, demand is exploding for Medicaid coverage, including managed care. About 125 insurers offer managed Medicaid health plans for 21 million recipients with the six largest insurers accounting for more than 36% of that membership.

Insurers are optimistic about the potential for profitable growth in the Medicaid market thanks in part to the American Recovery and Reinvestment Act of 2009 (ARRA) and The Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA). Tucked inside ARRA – commonly known as the federal economic stimulus package — is an estimated $88 billion in assistance for state Medicaid programs. CHIPRA budgets $33 billion in federal funds to help provide medical coverage to an additional 4.1 million children by 2013. Furthermore, some states are expanding managed Medicaid coverage to more medically needy populations in an effort to help control costs and impose more performance measures.

In the latest Healthcare Business Strategy report, MFA examines the current state of the managed Medicaid market, including membership and key financial data for top Medicaid insurers, and discusses how new government policies are shaping opportunities for health plans in this arena.