According to the Boston Globe, Blue Cross and Blue Shield of Massachusetts intends to reduce its administrative expenses. It intends reductions in its 3,800 employee staff through attrition, the introduction of new technologies and other steps. This may be a trend among health plans.
President-elect Obama has proposed to increase health care coverage. Among drivers affecting increased purchasing of insurance are efforts to reduce administrative expenses. The Lewin Group has made estimates of this impact. We summarize costs of individual and small group administrative costs, as reported by SEER participants.
Health plan stocks decreased 28.3% for the month of October. All valuation indicators decreased last month. Since twelve of the fourteen plans reported earnings last month and most reported worse performance, it is reasonable to assume the 28.3% decrease in stock price was driven by a more pessimistic outlook, along with worse investment returns, and mixed operating results. The broader market, measured by the S&P 500, fell by 16.8%.
Twelve of the fourteen publicly-traded health plans announced earnings last month. Aetna had explosive growth in Medicare Advantage revenues. AMERIGROUP Corporation experienced a 41.1% increase in operating income in part because of an improved HBR. Centene, aided by a decreasing HBR, had a 10.9% increase in net income. CIGNA’s net income decreased 26.2%, due to a 63.9% decline in non-operating income. Coventry Health Care had strong growth in Medicare Advantage membership, which led to an increase in revenue of 17.9%. HealthSpring reported a 65.5% growth in operating earnings on a 45.7% increase in revenues, in particular Medicare Advantage. Humana experienced a 29.3% decline in net income on a higher overall HBR despite a 14.9% growth in total revenues. Molina Healthcare reported a 21.1% increase in operating income, but a decline in net income due to a decline in non-operating income. Triple-S Management Corporation had a 53.0% increase in Medicare Advantage membership leading to a 66.6% growth in Medicare Advantage revenues.UnitedHealth Group reported a decrease in net income of 24.0%, as HBR increased and experienced a loss in non-operating income. Universal American Corporation experienced a large growth in Medicare part D membership to 1.8 million due to its acquisition of Community CCRx (SM) prescription drug plan. WellPoint, Inc. experienced declining operating, due to an increased HBR.
Humana closed its acquisition of Cariten Healthcare, which was announced on August 4th.
AvMed Health Plans
recently announced that it has appointed Ed
Hannum to President and Chief Operating
Officer. Centene Corporation appointed
Patrick M. Healy as President and Chief
Executive Officer of Peach State Health Plan.
HealthNet, Inc. announced that Jonathan
Rollins, CFA has been appointed as vice
president and treasurer. Neighborhood Health Plan of Massachusetts
has recently appointed David Segal to Chief
Operating Officer. Tufts Health Plan recently announced that Umesh Kurpad has joined the
company as Chief Financial Officer.
This month’s insert looks at the background of the PBM industry, prescription drug trends, cost controlling methods used by PBMs, and an analysis of the three leading PBM’s.
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