On February 20th, CMS released a preliminary estimate of the National Per Capita Growth Percentage for calendar year (CY) 2010, which is a key factor when CMS determines the capitation rates for Medicare Advantage for next year. This lower than expected increase has caused Humana to “closely” analyze various assumptions in CMS’s announcement. Stock prices for health plans tumbled the following day by a median value of 20.7%.
On average, health plan stock prices decreased 21.8% in February with valuation indicators following suit. Medicare plan providers had the largest declines in stock price, as a result of much lower than expected rate increases for 2010 announced by the Centers for Medicare & Medicaid Services (CMS).
Ten of the fourteen publicly-traded health plans announced earnings last month. Aetna’s net income decreased 44.2% year-over-year, due to investment losses. AMERIGROUP Corporation posted a 7.7% decline in total membership, however, experienced a gain of 10.3% in total revenues as a result of their operations in New Mexico and rate increases. Centene Corporation reported a 22.0% increase of in total revenues due in part to organic and inorganic growth in membership. CIGNA experienced a 166.5% decrease in net income, year over year, attributed to non-operating losses. Coventry Health Care’s total membership dropped 3.8% despite gains in its Medicare Advantage membership. Health Net, Inc. had a 39.5% decrease in net income due to a loss in both operating and non-operating income. Health Spring’s Stand-Alone Medicare Part D increased membership by 102.9% however, monthly premiums declined 3.1%. Humana, Inc. experienced losses to net income despite growth in total membership. Molina Healthcare reported a decrease of 13.2% in net income due to investment losses. Universal American Corporation experienced growth to net income in part to increases in membership and improvement to its margins.
Humana, Inc. announced that Paul Kusserow has been appointed Senior Vice President and Chief Strategy Officer. AMERIGROUP Corporation appointed John R. Finley, Esq., MPH to the position of Chief Compliance Officer.
Aetna, Inc. announced that its Board of Directors has authorized the repurchase of an additional $750 million in common stock.
This analysis reviews the capital market activities of health plans over the past year and long term. For the year, health plans sharply decreased their use of capital markets to levels unseen since 2003.
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