Managed Care


Medicare drives plan membership; Wall Street moderately bullish

MANAGED CARE February 2005. © MediMedia USA
Managed Care Outlook

Medicare drives plan membership; Wall Street moderately bullish

MANAGED CARE February 2005. ©MediMedia USA

In a world riddled by risk, managed care is giving Wall Street reason for optimism. Last year, the sector had a banner year — with an average weighted return of 49 percent, compared with 9 percent for the S&P 500. And this year holds promise too, according to Eric Veiel, an industry analyst at Wachovia Securities.

Consider that industry fundamentals appear solid, Medicare continues to drive membership growth, and merger and acquisition activity is expected to continue apace. As a result, investors should have high expectations for managed care companies. "The glass is half full," Veiel wrote in a recent report to investors. "We are optimists."

A big reason for his bullishness is Medicare. Last year, managed care enrollment in the program rose 3.5 percent nationally, and enrollment is reportedly picking up. And beyond any increase in the traditional HMO, Veiel points out that regional PPOs and the federal Prescription Drug Plan should further boost membership. What's more, this should accelerate as 2006 gets closer.

Another factor is the emergence of the consumer-directed health plans, which many expect to grow quite quickly. For instance, Veiel estimated that enrollment increased significantly at major companies — 108 percent at UnitedHealth group, 226 percent at BCBS plans, and a whopping 1,567 percent at Cigna.

Tempering the upside is a modest 2 percent forecast for enrollment increase, although Aetna is expected to post the largest gain, at 6 percent.

Sources: Inside Consumer-Directed Care, Wachovia Securities; Kaiser/HRET Survey of employer-sponsored health benefits, 2004.


2014 Annual HEDIS® and Star Ratings Symposium Nashville, TN November 3–4, 2014
PCMH & Shared Savings ACO Leadership Summit Nashville, TN November 3–4, 2014
Medicare Risk Adjustment, Revenue Management, & Star Ratings Fort Lauderdale, FL November 12–14, 2014
World Orphan Drug Congress Europe 2014 Brussels, Belgium November 12–14, 2014
Healthcare Chief Medical Officer Forum Alexandria, VA November 13–14, 2014
Home Care Leadership Summit Atlanta, GA November 17–18, 2014
6th Semi-Annual Diagnostic Coverage and Reimbursement Conference Boston December 4–5, 2014
Customer Analytics & Engagement in Health Insurance Chicago December 4–5, 2014
Pharmaceutical and Biotech Clinical Quality Assurance Conference Alexandria, VA December 4–5, 2014
9th Semi-Annual Medical Device Coverage and Reimbursement Conference San Diego December 5, 2014
8th Annual Medical Device Clinical Trials Conference Chicago December 8–9, 2014
HealthIMPACT Southeast Tampa, FL January 23, 2015