P&T
Our
Other
Journal
MediMedia Managed Markets
Managed Care

 

High Profits Seen for HMOs Through 2003

MANAGED CARE May 2003. © MediMedia USA
News and Commentary

High Profits Seen for HMOs Through 2003

MANAGED CARE May 2003. ©MediMedia USA

The good times will go on for most health plans in terms of earnings through the rest of this year, experts believe.

That's because rate hikes are "in excess of medical trends," Rob Mains, an analyst with Advest, tells Business Insurance.

Greg Crawford, an analyst with Fox-Pitt Kelton, agrees. "Right now, it appears that premium rates will continue to track with medical costs," he says. "Medical costs are escalating, so you've got a situation where the companies are pricing in line with their expected cost, and I don't see any of the underlying economics of the industry disrupting that, so I think the outlook is stable and strong."

According to 2002 year-end results, the big winners are Health Net, Coventry, WellPoint, Anthem, UnitedHealth Group, and Humana.

There is a cloud on the horizon, however. HMOs are enjoying their earnings at employers' expense, and no one knows how long that can continue.

"Our goal is to try to get enough of a moderation in the health care cost trend to create an environment where the premiums aren't quite as high," David Olson, Health Net's vice president for investor relations, tells BI. "We're hearing from employers that they would like to find a way to lower premiums."

Evidence exists that employers aren't waiting for health plans to lead the way.

For instance, the Leapfrog Group focuses on improving patient safety as a way of reducing costs. Some employers want more monitoring of providers in order to pass that information on to employees. But that's not the only thing that will be passed on. Cost-shifting is being discussed more, but does not seem to have taken hold as much as Mains thinks it should have by now.

Meetings

Pharmaceutical Pricing and Contracting Conference Philadelphia, PA September 22–23, 2014
Private Health Insurance Exchanges Conference Washington, D.C. October 7–8, 2014
National Healthcare Facility Management Summit Palm Beach, FL October 16–17, 2014
National Healthcare CFO Summit Las Vegas, NV October 19–21, 2014
National Healthcare CXO Summit Las Vegas, NV October 19–21, 2014
Innovative Member Engagement Operations For Health Plans Las Vegas, NV October 20–21, 2014
4th Partnering With ACOs Summit Los Angeles, CA October 27–28, 2014
2014 Annual HEDIS® and Star Ratings Symposium Nashville, TN November 3–4, 2014
PCMH & Shared Savings ACO Leadership Summit Nashville, TN November 3–4, 2014
World Orphan Drug Congress Europe 2014 Brussels, Belgium November 12–14, 2014
Medicare Risk Adjustment, Revenue Management, & Star Ratings Fort Lauderdale, FL November 12–14, 2014
Healthcare Chief Medical Officer Forum Alexandria, VA November 13–14, 2014
Home Care Leadership Summit Atlanta, GA November 17–18, 2014