Blues' HMOs: Shrinking, but profitable

An occasional snapshot of current facts and trends in medicine.

Quick View. Posted Nov. 15, 2004

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Between 2000 and 2003, HMO plans belonging to BlueCross BlueShield Assn. companies have declined significantly in membership, but net income has shot up about 500% as a group.

Among the reasons behind the increase in HMOs' net income over the three years was a moderation in the rise of health care costs in 2003, compared with what was anticipated, as well as insurance rate increases put into place by payers, said Sally Rosen, a senior financial analyst for A.M. Best Co. The largest Blues HMO in 2003 was Keystone Health Plan East, an HMO of Philadelphia-based Independence Blue Cross, with nearly 1.2 million members. The plan with the highest profits was Health Options Inc., owned by BlueCross BlueShield of Florida, with net income of $137.2 million.

Note: Underwriting gain or loss is the difference between what the HMO collects in premiums and what it pays in health care and administrative expenses.

Source: A.M. Best Co.

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