Financial Results

As Friday Shuts Down and Bright Teeters, Experts Offer Look at What Went Wrong

Friday Health Plans Management Services Company, Inc. is in the death throes of its life as an Affordable Care Act exchange insurer — regulators are stepping in to take over its operations, and it’s laying off all employees in its home state of Colorado. Meanwhile, Bright Health Group, Inc., which has already exited every ACA exchange in which it operated, reached a deal to sell its California Medicare Advantage plans to Molina Healthcare, Inc. in order to satisfy Bright’s creditors.

Experts tell AIS Health, a division of MMIT, that both insurers largely followed the same playbook: raising massive amounts of funding from venture capital (VC) investors and promising to delight customers with tech-driven, differentiated products. But those big plans fell apart when faced with the realities of an industry that is especially challenging to disrupt, and then capital infusions dried up when interest rates rose.


Private Equity’s Provider Buyup Sparks Concern, but Big Insurers May Benefit

Private equity (PE) ownership of physician practices and other providers has, on a national scale, led to higher prices in health care, experts said during a June 6 panel convened by the National Institute for Health Care Management (NIHCM) Foundation. One expert also added that health insurers are poised to benefit from the PE ownership trend in health care delivery, as insurers frequently snap up providers when PE entities “exit” their takeover of providers.

In his presentation, Atul Gupta, Ph.D., assistant professor of health care management at the University of Pennsylvania’s Wharton School of Business, made the case that “private equity [ownership of providers] has dramatically increased over the last few years.”


Key Financial Data for Leading Health Plans — First Quarter 2023

Here’s how major U.S. health insurers performed financially in the first quarter of 2023. Health Plan Weekly subscribers can access more health plan financial data — including year-over-year comparisons of leading health plans’ net income, premium revenue, medical loss ratios and net margins. Just email to request spreadsheets for current and past quarters.


Colorado, North Carolina Put Friday Health Into Receivership

North Carolina and Colorado recently became the latest in a string of states that have taken over the reins of Friday Health Plans Management Services Company, Inc.’s subsidiaries in a bid to ensure consumers and providers aren’t harmed by the insurer’s implosion. The company’s downfall has implications for health insurers, too, as they may not receive the risk-adjustment funds they’re expecting if Friday can’t pay its share, an industry expert previously told AIS Health.

Insurance Commissioner Mike Causey said June 20 that Friday Health Plans of North Carolina Inc. “consented to being placed into receivership to protect North Carolina policyholders due to its reported insolvency and inability to raise additional funds from outside investors.” Technically, the action is not yet completed, as the state said it filed its receivership petition with the Wake County Superior Court and will post the order on the North Carolina Dept. of Insurance's website once it is signed.


Humana, UnitedHealth Utilization Disclosures Put MA Powerhouses in Hot Seat

Not long after UnitedHealth Group sparked an insurer-stock selloff by revealing that it is seeing higher-than-usual outpatient care utilization, Humana Inc. disclosed that it, too, is seeing elevated medical costs due to an increased use of services.

“At this point it appears that there may be a new trend brewing with a rise in utilization and claims, particularly in the Medicare Advantage segment,” A.M. Best Senior Director Sally Rosen remarked in a new video released by the insurance-focused credit rating firm.

And that’s significant for the managed care industry writ large, Rosen tells AIS Health, a division of MMIT. “Medicare Advantage comprised more than one-third of the industry’s underwriting income in 2022, and while the dollar amount has fluctuated, the percentage of underwriting income coming from Medicare Advantage has made up about one third for each of the past three years,” she says.


Insurer Stocks Take Hit After UnitedHealth Says Seniors Are Using More Outpatient Care

UnitedHealth Group’s stock took a nosedive on June 13 after Chief Financial Officer John Rex said elevated outpatient care utilization might push the insurer’s 2023 medical loss ratio (MLR) higher than it originally expected. Since UnitedHealth is the bellwether of the managed care sector, other insurers’ stock traded down in the wake of Rex’s comments. However, equities analysts suggested that the highly diversified UnitedHealth isn’t in any danger of taking a major earnings hit.

During the Goldman Sachs Global Healthcare Conference, Rex said UnitedHealth has seen higher levels of outpatient care activity since the first quarter of 2023, and looking at data from the second quarter, the trend doesn’t appear to be going away. He cited hip and knee replacements as well as cardiovascular care — all “very localized in [the] Medicare business” — as the areas where UnitedHealth is seeing higher utilization.


As Friday Health Begins Shutdown, Nevada Raises Specter of Unreliable Financial Reports

Friday Health Plans Management Services Company, Inc. — a Colorado-based insurer that offers Affordable Care Act exchange plans in seven states — is in a downward spiral. Concerned by the company’s deteriorating financial situation, state regulators are taking steps such as putting the insurer’s subsidiaries under supervision and placing them into receivership.

Georgia, for example, recently garnered headlines by announcing that Friday enrollees will need to find a different health plan. And Colorado said on June 1 that it will work with the insurer to wind down its business across the country due to ongoing capital shortfalls.


Insurtechs Are Pulling Back Amid Financial Turmoil

Venture-backed Friday Health Plans will cease operating after several state regulators placed it into receivership due to its rocky finances. The Colorado-based insurer operated in seven states — Colorado, Georgia, Nevada, New Mexico, North Carolina, Oklahoma and Texas — and as of December 2022 covered almost 400,000 enrollees, according to AIS’s Directory of Health Plans.

The insurtech, founded in 2015 with a focus on the Affordable Care Act exchanges, raised over $306 million in venture capital and debt funding. Yet in late 2022, it announced it would scale back from operating in seven states to five states, pulling out of Texas and New Mexico. In March 2023, it was placed into receivership in Texas and soon other states took similar actions.


MCO Stock Performance, May 2023

Here’s how major health insurers’ stock performed in May 2023. UnitedHealth Group had the highest closing stock price among major commercial insurers as of May 31, 2023, at $487.24. Humana Inc. had the highest closing stock price among major Medicare insurers at $501.87.


News Briefs: NYC Retirees Sue to Block Transition to Aetna-Administered Plan

Shortly after the city of New York inked a deal with CVS Health Corp.-owned Aetna to administer a PPO plan to some 250,000 retirees and their eligible dependents, a group of former city employees are suing to block Mayor Eric Adams (D) from transitioning their retiree health care coverage away from fee-for-service (FFS) Medicare. According to news reports, the class action lawsuit was filed in the state Supreme Court on May 31 by nine individual municipal retirees and the NYC Organization of Public Service Retirees, which sued to block the implementation of a previous contract with Elevance Health, Inc. (then Anthem). The original transition was supposed to begin on April 1, 2022, but the city revised its plans after a state Supreme Court judge ruled that the proposal violated city law by requiring retirees who opted out of the switch to pay $191 per month to maintain their FFS coverage. That July, Elevance backed out of the deal. In the “final approved plans, retirees who opt out of the city’s coverage will have to pay for any supplemental coverage on their own,” reports Becker’s Payer Issues. The plaintiffs alleged that the option to switch to FFS with Medicare Supplemental Insurance is cost prohibitive and that the new coverage offering constitutes nothing more than a “bait and switch,” according to Crain’s New York Business. The $15 billion pact with Aetna is expected to save the city $600 million a year.