A.M. Best Special Report: The Battle for Position -- Health Insurers Align Their Operations with Changing Markets.OLDWICK, N.J. -- Health insurers and managed care companies can grow larger and more profitable in 2007 and beyond--if they choose the right markets and products and work efficiently. Some segments are enjoying moderating medical cost trends and technology driven savings, but other lines are seeing intense competition. Companies will seek to maintain or establish strategic positions that set the stage for future profits, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the 2007 Health Review/Preview report from A.M. Best Co. Some companies will position themselves through mergers and acquisitions. Whatever path they take, health insurers may find that today's secure position is vulnerable tomorrow. In regional and national markets, profitability has remained favorable for both for-profit and nonprofit insurers nonprofit insurers, n.pl service corporations organized under nonprofit laws for the purpose of providing dental care insurance. . Publicly traded companies publicly traded company A company whose shares of common stock are held by the public and are available for purchase by investors. The shares of publicly traded firms are bought and sold on the organized exchanges or in the over-the-counter market. can expect continued strong earnings as they combine administrative efficiencies with stable medical cost trends. Robust earnings for many nonprofit A corporation or an association that conducts business for the benefit of the general public without shareholders and without a profit motive. Nonprofits are also called not-for-profit corporations. Nonprofit corporations are created according to state law. companies have boosted their capital positions, but moving into 2007, A.M. Best expects lower earnings in the nonprofit segment. Medical cost trends generally have moderated to the upper single digits, but more expensive technologies and prescription drugs prescription drug Prescription medication Pharmacology An FDA-approved drug which must, by federal law or regulation, be dispensed only pursuant to a prescription–eg, finished dose form and active ingredients subject to the provisos of the Federal Food, Drug, could drive this higher. A.M. Best believes the medical loss ratio for most companies has bottomed out, due to the decline in medical cost trends. To maintain or increase operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: , insurers will need to find other ways to lower total costs. As health insurance premiums rise each year, employers continue to pursue lower-cost alternatives. More employers are offering high deductible That which may be taken away or subtracted. In taxation, an item that may be subtracted from gross income or adjusted gross income in determining taxable income (e.g., interest expenses, charitable contributions, certain taxes). plans. Consumer driven health plans make individuals more responsible for their health care spending, and A.M. Best expects the number of members in consumer-driven plans to continue growing. Still, it will remain a small percentage of all insureds. The commercial group market is very competitive, and employer groups employer group Association of employers Managed care An entity with a current group benefits agreement in effect with a health plan to provide covered health care services to its employee-subscribers and eligible dependents. are migrating from company to company. Probably the health insurance sector that has seen the stiffest competition over the past year is Medicare supplement. Medicare Advantage and private fee-for-service products have made a big impact on the senior health market. Open enrollment periods for Medicare Part D prescription drug plans also have offered more products at varying prices. The competitive landscape has changed, and national managed care companies have moved aggressively into senior health. The big Medicare news for 2006 was the implementation of the prescription drug program on January 1, 2006. Total enrollment in Medicare Part D was 16.6 million as of November 1, 2006. BestWeek subscribers can download a PDF (Portable Document Format) The de facto standard for document publishing from Adobe. On the Web, there are countless brochures, data sheets, white papers and technical manuals in the PDF format. copy of all full special reports at no additional cost or a combination of the PDF copies plus all related spreadsheet files of the report data at no additional cost from our Web site at www.bestweek.com. Nonsubscribers can download a PDF copy of the full special report (12 pages) for $55 or a combination of the PDF copy plus the spreadsheet file of the report data for $140 from our Web site at www.bestweek.com. Call customer service for more information, (908) 439-2200, ext. 5742. Founded in 1899, A.M. Best Company is a full-service credit rating organization dedicated to serving the financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. industries, including the banking and insurance sectors. For more information, visit www.ambest.com. |
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