The Affordable Care Act's health insurance exchanges haven't just helped traditional insurance companies. They've also opened up a big pipeline for provider systems that offer their own health plans.
Indiana University Health recorded a big jump in premium revenue from its insurance arm in the first half of 2015, the first year IU Health started selling plans on Indiana's federally operated exchange. The Indianapolis-based system said in a bondholder document that the ACA policies “as well as more members in both Medicaid and Medicare programs” led to the surge in premiums.
Republican Indiana Gov. Mike Pence expanded Medicaid this year to low-income people who earn up to 138% of the federal poverty level. Pence's plan was an alternative to the standard Medicaid expansion outlined in the Affordable Care Act. Medicare Advantage continues to enroll more seniors, and the private program now enrolls 17.6 million people nationwide, according to August figures from the CMS.
The influx of people with exchange, Medicaid and Medicare Advantage coverage pushed up IU Health's premium revenue by 70% year over year, from $114.8 million in the first six months of 2014 to $195.7 million in the first half of this year. However, the health system did not disclose how profitable its health plans were. Many health insurers struggled with the first wave of exchange enrollees, who were often sicker and required more medical services. The CMS has not released exchange enrollment data by insurer for 2015.
IU Health's Medicare Advantage membership has grown 15% year over year to almost 12,000 covered lives, government data show. Providers own many of the highest-quality Medicare Advantage plans, and some health systems with experience in Medicare's accountable organizations are exploring whether they should launch their own Medicare plan. IU Health operates a Medicare plan with 4.5 stars out of five, which leads to bonus payments.
Overall, IU Health posted an 11.7% operating margin on $2.9 billion of revenue in the first half of its fiscal year, which ended June 30. That was down from its 13.7% margin on $2.8 billion of revenue in the same period a year ago. Anthem, the Indianapolis-based insurer that is looking to acquire Cigna Corp. for more than $54 billion, represented almost 20% of IU Health's gross patient revenue.
Admissions were up 2% in the first six months of this year. Emergency room visits increased 4.3%.
