1、 Managed Care Annual Health Benefits Survey 2020 Outlook;Some Moderation in Premium Growth,But Pricing Still to Exceed Cost Growth Managed Care|Annual We surveyed 676 health benefit managers regarding their plans for health benefits for 2020.We asked their views about health insurers,cost trends,pre
2、mium expectations,and priorities.2020 Premium Growth to Moderate but Still Increase Faster than Cost Trend Expectations.Employee premiums are expected to increase 5.4%,on avg(vs 6.1%a year ago).This compares with an expected gross medical cost increase of 5.1%Y/Y for 2020(vs a 5.1%Y/Y increase expec
3、tation in our 2019 survey).Benefit buydowns are expected to reduce employers net medical cost trend increases by approx.130 bps(vs 150 bps last year),bringing the expected net medical cost trend to a 3.8%Y/Y increase in 2020(vs a 3.6%Y/Y expected increase for 2019 in our survey last year).Similar to
4、 last year,“Specialty drug costs”was seen most often as the primary driver of medical cost growth,followed by“Proliferation of high cost claimants”and“Drug costs generally.”On a weighted avg basis,employers expect overall drug costs to increase by 5.5%Y/Y in 2020,a step down from the expected 6.0%Y/
5、Y drug cost increase expected for 2019.In Aggregate,all Major MCOs Improved or Had Stable Competitive Positioning Y/Y.Across major national health plans(Aetna,Blues,Cigna,and UnitedHealthcare),aggregate scores were either relatively stable or improved versus last year.The Y/Y improvement was highest
6、 for Aetna(0.06 pts or 1.6%),followed by Blues(0.05 pts or 1.3%).Under Customer Services,all major health plans showed improvement Y/Y,with the rating for Blues increasing the most.In the Care/Condition Management category,Aetna and the Blues showed improvement Y/Y,while CI was stable and UNH declin
7、ed by 0.02 pts(0.5%).Under Plan Support&Tools,Aetna,Blues,and CI showed Y/Y improvement,while UNH declined 0.08 pts(2.2%).Finally,under Networks,Blues maintained their leadership but the scores for Aetna(up 2.9%)improved the most Y/Y.Across all MCOs in the survey,non-ANTM BCBS was the leader,on an a
8、ggregate basis.Among public MCOs,CI took the leading position,followed by UNH and Aetna.Medical Cost Trends in 2019 In-Line to Slightly Higher than Expectations.Among self-insured employers,33%of respondents(vs 36%last year)are seeing higher gross medical costs than their expectation heading into 20
9、19.Some 51%see 2019 medical costs in-line with expectations,while 16%have experienced a favorable trend in 2019.Fewer Employers are Issuing RFPs for 2020.While a greater percentage of respondents have their PBM contracts up for renewal for 2020(72%vs 64%),only 26%of respondents plan to formally rele
10、ase a new RFP for their PBM relationship in 2020(vs.36%issuing or planning to issue an RFP for 2019 in our survey last year).Some 46%of respondents have chosen to renew their existing PBM vendor for 2020 which is consistent with results from our survey last year(43%of respondents).This could be expl
11、ained by various factors including PBMs aggressively trying to maintain their current customer base without going through an RFP process,changing PBMs can be highly disruptive and some employers may be choosing not to disrupt their employee base during a time when employment is tight,employers may h
12、ave done informal market checks by gauging the outcomes of some high profile re-bids,etc.3 October 2019 Equity Research Americas|United States DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES,ANALYST CERTIFICATIONS,LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYST
13、S.US Disclosure:Credit Suisse does and seeks to do business with companies covered in its research reports.As a result,investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report.Investors should consider this report as only a single facto
14、r in making their investment decision.Research Analysts A.J.Rice 212 325 8134 aj.ricecredit- Eduardo Ron 212 325 7491 eduardo.roncredit- Jailendra Singh 212 325 8121 jailendra.singhcredit- Caleb Harris,CPA 212 325 7458 caleb.harriscredit- 3 October 2019 Managed Care 2 Competitive PBM Positioning for
15、 CVS Caremark&Express Scripts Seen Improving in 2020.Some 45%indicated that CVS Caremark has improved its competitive positioning for 2020,while 29%indicated that its positioning has deteriorated for 2020.For Express Scripts,45%highlighted improvement for 2020,while 42%noted deterioration.Finally,fo
16、r OptumRx,26%highlighted improvement,while 16%noted deterioration.CVS Caremark and OptumRx were viewed by respondents as having the most net improvement in competitive positioning year-over-year.Importantly,Cigna(ESRX)raised its expected 2020 retention rate for the 2019 selling season(Jan 1,2020 sta
17、rt)for Pharmacy Services to 97-98%,an increase of 50 bps from the midpoint of the companys previous expectations.With respect to its 2020 PBM selling season,CVS now has gross wins YTD of$3.8 bln,up from$3.2 bln previously.Thoughts on the Impact of Recent Deals.Roughly 86%of respondents(similar to la
18、st year)believe the CVS/Aetna transaction has had no impact on their companys willingness to work with Aetna and CVS,while 9%of respondents(similar to last year)see this transaction making it more likely for their company to work with CVS/Aetna.Similarly,87%of respondents(similar to last year)believ
19、e the Cigna/Express Scripts transaction has no impact on their companys willingness to work with Cigna or Express Scripts,while 7%of respondents(vs 8%last year)see the transaction making it more likely for their company to work with CI/ESRX.Implications for Managed Care Coverage.The 2020 Credit Suis
20、se Annual Health Benefits Survey results are similar to last years results in several key areas.The moderation in premium growth is noteworthy.However,the 50 bps moderation is not enough to change our view that the Middle Market/Large Group/National Account markets remain relatively stable.No new is
21、sues are identified as it relates to medical costs,and medical cost increases are expected to be similar to what we have observed over the last few years.In line with historical practice,we expect most MCOs to offer 2020 guidance assuming a conservative 50-100 bps Y/Y pick up in their cost trend.The
22、 perception that the large national MCOs have seen stable to improving competitive positioning heading into 2020 bodes well for the overall market,in our view.Figure 1:Current Ratings,Valuations,and Price Targets Forward P/E Company Rating Price(10/01/19)2019E 2020E 2021E Price Target Return to Pric
23、e Target Implied Price Target P/E on 2020E LT Earnings Growth Tgt LT Revenue Growth Tgt ANTM Outperform$238.4 12.3x 10.4x 9.2x$345 44.7%15.0 x 12-15%10-12%CI Outperform$150.4 9.0 x 8.1x 7.2x$213 41.6%11.5x 10-13%6-8%HUM Outperform$254.4 14.5x 13.8x 12.1x$315 23.8%17.0 x 11-15%N/A UNH Outperform$217.
24、2 14.8x 13.3x 11.7x$293 34.9%18.0 x 13-16%6-9%CVS Neutral$62.4 8.9x 8.7x 8.1x$61 -2.2%8.5x N.D.N.D.CNC Neutral$42.8 9.8x 9.0 x 7.9x$63 47.4%13.3x Double Digit Double Digit WCG Neutral$258.5 18.6x 15.8x 13.4x$307 18.8%18.7x N.D.N.D.MOH*Not Covered$109.5 9.5x 9.5x 9.1x 12-15%10-12%Source:Credit Suisse
25、,FactSet;N.D=Not Disclosed*Forward P/E shown for MOH based on consensus estimates 3 October 2019 Managed Care 3 Table of Contents Executive Summary 4 Key Findings.5 Strength&Weaknesses of National Health Insurance Companies 9 Aggregate Rankings.9 Rankings by Market Category.13 2019 Landscape&RFP Env
26、ironment for 2020 17 Health Insurance Arrangements for 2019 and Expectations for 2020.17 Health Plans Offered for 2019.17 2020 RFP Activity.18 Premium and Cost Trends 22 Employee Premiums,OOP Costs&Employers Contribution Expectations.22 2019 Cost Trends&2020 Expectations.23 2019 Cost Trends Relative
27、 to Expectations 23 2020 Cost Trend Expectations 24 Cost Trend Drivers 25 Guarantees around Medical Cost Trends 26 Use of Narrow Networks 27 Employee Well-Being 28 Consumer Driven Health Plan(CDHP)Trends 30 Retiree Coverage 31 Respondents View on PBMs 33 RFP Activity for 2020 33 Carved-In vs.Carved-
28、Out 36 Drug Costs 36 Competitive Positioning of PBMs 40 Respondents View on Telemedicine 42 Respondents View on Expert Opinion Services 46 Other Miscellaneous Topics 47 Respondents View on Recent Mergers.47 Views on Providing Healthcare Benefits over the Next 10 Years.48 Appendix 49 3 October 2019 M
29、anaged Care 4 Executive Summary We surveyed 676 health benefit managers across the country to gain insight into market perceptions regarding national health insurance companies,cost trend and premium expectations,and employer priorities with respect to health benefit design heading into 2020.The sur
30、vey primarily focused on employers with more than 100 employees.We split this target market into three segments:Middle Market(employers with 101-500 employees),Large Group market(employers with 501-5,000 employees),and National Accounts(employers with more than 5,000 employees).The figure below prov
31、ides a breakdown of our survey respondents by these markets and by geography.While Middle Market and National Accounts represented 55%and 8%of the companies participating in our survey,these segments accounted for roughly 5%and 63%of employees represented in this survey,respectively.Figure 3:Survey
32、Respondents by Market Segment Figure 4:Employees Represented by Market Segment Source:Credit Suisse Source:Credit Suisse As highlighted in the figure below,the health benefit managers represented in our survey are geographically diverse.Additionally,our survey covers a wide array of industries.Figur
33、e 2:Market Categorization Market Employees Middle Market 101-500 Large Group 501-5,000 National Accounts 5,000+Source:Credit Suisse 3 October 2019 Managed Care 5 Figure 5:Survey Respondents by Geography Figure 6:Survey Respondents by Industry Source:Credit Suisse Source:Credit Suisse*Other includes
34、Transportation 2%;Communications 2%;Industrials 1%;Business Services 1%;Agriculture 1%;Mining 1%;and Other 12%Key Findings When Ranked across Different Health Plan Attributes,Blue Cross Blue Shield was Considered the Leader by Most Benefit Managers,on an Aggregate Basis,Slightly Ahead of Cigna and U
35、nitedHealthcare.Among individual categories,BCBS(non-Anthem),Cigna and UNH ranked highest in Customer Service,while Kaiser was the leader in Care/Condition Management.Kaiser and Cigna were ranked highest in Plan Support&Tools while BCBS(non-Anthem)was the leader in the Networks category.Across major
36、 national health plans(Aetna,Blues,Cigna,and UnitedHealthcare),aggregate scores were either relatively stable or improved versus last year.The improvement compared to our last survey was highest for Aetna(0.06 points or 1.6%),followed by the Blues(0.05 points or 1.3%).In the Middle Market segment,BC
37、BS(non-Anthem)was the leader,ahead of UNH and Kaiser.In the Large Group market,Cigna took the top spot followed by non-Anthem BCBS and UNH.Among National Accounts,Cigna was ranked as the leader,followed by Kaiser and UNH.No Significant Interest in Switching from One Type of Health Insurance Arrangem
38、ent to Another.Roughly 95%of survey respondents are staying with their current health insurance arrangements(compared to 90%of respondents in our survey last year),with 3%moving from fully-insured to self-insured(ASO),while 2%are still unsure for 2020.UNH,Aetna,and ANTM Have the Most Employers Rebid
39、ding Their Core Medical Plan for 2020.Roughly 45%of survey respondents plan to rebid all or a significant portion of their core medical plan for 2020(vs 38%last year).Similar to last year,the RFP activity is relatively higher in the Middle Market and lowest among National Accounts.Among the responde
40、nts who plan to rebid(all or a significant portion of)their core medical plan for 2020,UNH had the most exposure,followed by Aetna and Anthem.Kaiser,at 36%,had the lowest exposure to the respondents who plan to re-bid(all or a significant portion of)their core medical plan for 2020.Manufacturing 17%
41、Health Care 15%Financial Services 10%Professional and Business Services 7%Public Sector and Education 5%IT&Telecom 5%Construction 4%Wholesale&Retail 4%Energy&Utilities 4%Legal 4%Real Estate 3%Consumer Discretionary 2%Other 20%3 October 2019 Managed Care 6 When Evaluating a Potential Carrier,Costs/Di
42、scounts Are the Most Important Criteria(Similar to Last Year).Overall,Claims Management and Customer Service were the second and third highest ranked criteria,respectively,similar to last year with variations amongst the Employer groups.Within Large Group,Customer Service was selected as the fifth m
43、ost important criteria,while Breadth of Delivery Networks was chosen as the third most important criteria.Medical Cost Trends in 2019 Have Been In-Line to Slightly Higher than Expectations.For employers using self-insurance arrangements,33%of respondents(vs 36%last year)are experiencing higher gross
44、 medical cost trends than their expectation heading into 2019.Another 51%see 2019 medical cost trends in-line with expectations,while the remaining 16%have experienced favorable trend in 2019.Premium Increases Higher than Cost Trend Expectations.Fully-insured employers see premiums for their employe
45、es increasing 5.4%,on average,compared with 6.1%a year ago.Specifically,our survey also indicates that gross medical costs are expected to increase 5.1%Y/Y for 2020(vs 5.1%Y/Y increase for 2019 in our survey last year).However,benefit buydowns,such as cost-shifting and benefit reductions to employee
46、s,are expected to reduce the employers net medical cost trend increases by approximately 130 bps(vs 150 bps in our survey last year),bringing the expected net medical cost trend(post buydowns)to a 3.8%Y/Y increase in 2020(vs a 3.6%Y/Y expected increase for 2019 in our survey last year).Similar to la
47、st year,“specialty drug costs”was highlighted most often as a driver behind medical cost trend increases,followed by“Proliferation of high cost claimants”and“Drug costs generally.”Modest Uptick in Narrow Network Adoption.Some 33%of our survey respondents plan to use narrow/tiered networks for 2020(u
48、p from 25%in our 2019 survey).Looking across markets,responses were generally consistent.Among the respondents using narrow/tiered networks for 2019 and also planning to do so for 2020,48%expect higher enrollment Y/Y in plans using narrow/tiered networks next year.On an aggregate basis,employers exp
49、ect to generate roughly 6.8%in cost savings on plans using narrow/tiered networks compared to traditional plans in 2019.This compares to the 5.7%savings employers expected from narrow/tiered networks in 2019 compared to their traditional plans in 2018.Over the Next Three Years,Employers Are Primaril
50、y Focused on Employee Wellbeing.Some 78%of employer respondents are focused on employee well-being(enhancing employees physical,emotional,financial and social wellbeing).This is followed by clinical conditions(improving the health of employees and reducing the costs for key chronic conditions)and cr
