MINNEAPOLIS, June 4 /PRNewswire/ -- After a one-year blip, the decline of enrollment in Minnesota HMOs continued in 2003. Net income nearly doubled and premium increases slowed. HMOs have doubled their reserves in the last five years.
Part One of Minnesota Managed Care Review 2004 presents these and other findings about key market trends. The report, released here today, is Allan Baumgarten’s 15th annual report analyzing the Minnesota health care market. Baumgarten is an independent Minnesota-based analyst and consultant who also publishes annual reports analyzing health care markets in eight other states: California, Colorado, Florida, Illinois, Michigan, Ohio, Texas and Wisconsin. Part Two of Minnesota Managed Care Review will update information on HMOs and analyze hospital profitability and utilization, purchaser initiatives and other market developments.
In his new report, Baumgarten finds: -- Enrollment in insured commercial plans declined again. Enrollment in insured commercial (employer-sponsored) HMO plans dropped by about 68,000 lives in 2003, after a brief increase in 2002. Commercial HMO enrollment has declined from more than 1 million in 1996 to 744,000 in 2003, as employers sought other health plan options and as HMOs encouraged them to shift to PPO plans. -- HMOs increased their premium revenues per commercial enrollee per month by 7.9% in 2003, less than in the previous four years. In 2003, HMOs increased their average premium revenues from $208.97 to $225.51 per commercial member per month. However, the lower trend rate reflects the decision by Medica to declare a payment holiday in December and forego about 4% of its premium revenues for the year -- Minnesota HMOs doubled their profits in 2003. They had net income of $128 million in 2003, including $81.3 million on their operations. But for the Medica payment holiday, net income would have been much higher. By comparison, HMOs had net income of $65.6 million in 2003. -- HMOs made money on Medicare and public assistance plans in 2003 but lost $8.6 million from operations in their commercial plans. Excluding investment income, HMOs made $41.6 million on their Medicare plans and $44.1 million on their Medicaid and other state program plans. UCare, which has the largest Medicare+Choice plan in the state, made $9.8 million on its senior plan, making 2003 its first profitable year since starting that plan in 1998. -- HMOs increased their statutory net worth in 2003 by $166 million to $792 million, which is twice as much as they had five years ago. In the five years from 1999 to 2003, Minnesota HMOs had cumulative net income of $395 million. On average, they had enough reserves to continue paying claims and overhead for 2.35 months, up from 1.8 months in 2002. State law requires HMOs to maintain reserves of at least one month of operations but not more than three months. If Medica had not declared its payment holiday, it would have probably exceeded the three-month limit. Blue Cross Blue Shield of Minnesota, which had net income of $96.4 million in 2003, ended the year with reserves over its statutory ceiling.
Excerpts from the report, including the popular “Minnesota HMOs at a Glance” page can be viewed at http://www.allanbaumgarten.com/ . Minnesota Managed Care Review 2004, including both Parts One and Two, can be ordered from Allan Baumgarten for $135.00. Call 952/925-9121 or fax 952/925-9341. E- mail address: Baumg010@tc.umn.edu
Allan Baumgarten
CONTACT: Allan Baumgarten, +1-952-925-9121
Web site: http://www.allanbaumgarten.com/
