Original Publish Date: July 09, 2014
California health plans recently filed financial reports for the first three months of 2014 and thirty-seven of the sixty-six plans were profitable. This compares unfavorably to the first quarter of 2013 when forty-five plans were profitable.
Twelve plans began operations in 2014 and only three broke even or reported a profit.
Kaiser Foundation HP led all plans with a $1.14 billion profit.
Tangible Net Equity (TNE) for the plans was generally greater at the end of the first quarter 2014 than at the end of the first quarter 2013. TNE is defined by state statute and measures a plan’s solvency. It approximates net worth assuming intangible assets are removed and subordinated debt is added. TNE was higher for thirty-seven of the fifty-four plans that were operational in the first quarter of 2013.
Our report (click to download) presents Revenues, Medical Costs, Administrative Expenses, Net Income and TNE for sixty-six health plans that reported data to the DMHC for the first three months of 2014 and the first three months of 2013.
All information in this report was obtained from publicly available data on the DMHC web site. However, the DMHC web site doesn’t always incorporate post-close adjustments or audit adjustments. Accordingly, we asked representatives of all sixty-six health plans to review the DMHC figures and confirm they were correct. We made changes to our report if a plan asked us to correct their numbers.
Information not required to be filed with the DMHC (self-insured and parts of California insured business from non-domestic carriers) is not included in this report nor is it referenced in this article.
We prepared this report so a user could quickly determine the financial state of the health plan industry. Additional in-depth analysis is beyond the scope of this article.
We asked plan representatives to comment on the figures and here is their feedback sorted by plan name in alphabetical order.
AIDS Healthcare Foundation
Revenues increased from $181.9 million during the first three months of 2013 to $207.5 million during the first three months of 2014.
Staff Accountant Brandon Jong explained, “Most of the change is due to increased pharmacy operations. We have acquired more pharmacies and opened several healthcare centers in the North East and Southern United States.”
Brand New Day HMO
All financial results for the first three months of 2014 showed improvement over the first three months of 2013 except for net income. The company reported $68 thousand in net income in the first quarter of 2013 compared to a $470 thousand loss in the first quarter of 2014. Chief Operating Officer Jeff Davis said, “Medicare Membership is up causing revenue improvement. Medical costs increased proportionally to revenue. As the Brand New Day programs are implemented for new membership we expect some improvement in the company medical loss ratio.”
He continued, “Administrative costs are up principally due to increased marketing costs. Plan management expects ongoing marketing costs as a percentage of revenue to drop with projected future membership growth.”
Davis concluded, “Tangible net equity improved as shareholders increased company capital to support forecasted company membership and revenue growth.”
All financial results for the first three months of 2014 showed improvement over the first three months of 2013. Chief Financial Officer Bill Gregor attributed this to rate increases and increased enrollment.
Chinese Community Health Plan
All financial results for the first three months of 2014 showed improvement over the first three months of 2013. Revenues increased from $31.3 million to $40.8 million.
CFO Amy Tsui said, “This favorable result is due to our new product line, CoveredCA. At the end of March we had over 10,000 applications received and close to 8,500 new effectuated members from CoveredCA which doubled our existing commercial membership. At this time we are still seeing favorable medical service usage. It is fairly low as compared to our past experience on our commercial members.”
Contra Costa Health Plan
Revenues increased from $78.8 million during the first three months of 2013 to $94.2 million during the first three months of 2014. Kate Fowlie, Communications Officer, said, “Revenues increased over the prior period due to increases in Medi-Cal enrollment and capitation rates. Expenses increased over the prior period in near proportion to the revenue increase.”
Health Plan of San Joaquin
All financial results for the first three months of 2014 showed improvement over the first three months of 2013 except for the net loss. The net loss for the first quarter of 2013 was $1 million and the net loss for the first quarter of 2014 was $4.7 million. Company spokesperson David Hurst said, “The increase in total revenue in 2014 represents overall growth in membership through increased plan selection among Medi-Cal recipients in Stanislaus County, since HPSJ became the Local Initiative for Medi-Cal Managed Care in that county in 2013, as well as overall increased enrollment due to the expansion of the Medi-Cal program earlier this year.”
Health Plan of San Mateo
All financial results for the first three months of 2014 showed improvement over the first three months of 2013. Finance and Administrative Services Director Ron Robinson said, “The first quarter 2013 revenues in the report were understated at the beginning of the year due to the reserving of revenue for uncertain rate changes (loss of retroactivity, AB97 cuts). It was reconciled once we received final rates.”
Robinson continued, “The first quarter 2014 revenue is up due to Medi-Cal expansion and the influx of 15,000 new members. Revenue is tentative since we have not received final 13-14 rate year rates yet.”
Inland Empire Health Plan
All financial results for the first three months of 2014 showed improvement over the first three months of 2013.
Director of Finance Randee Roberts explained, “Medi-Cal expansion was effective January 1, 2014. This increased our membership an average of 57,000 members each month from January through March. This growth in membership increased our revenue and related expenses for the quarter.”
Kern Family Health Care
All financial results for the first three months of 2014 showed improvement over the first three months of 2013 except for net income. The company reported $1.7 million in net income in the first quarter of 2013 and a $1.5 million loss in the first quarter of 2014. Chief Financial Officer Robert Landis said, “The inclusion of the expansion population in 2014 is resulting in increased revenue and expense amounts when compared to 2013.”
L.A. Care Health Plan
Revenues increased from $574 million during the first three months of 2013 to $1.014 billion during the first three months of 2014. Amy Gurango, Media Relations Specialist, attributed the significant change to increases in membership related to the Medi-Cal expansion.
Partnership HealthPlan of CA
All financial results for the first three months of 2014 showed improvement over the first three months of 2013. Revenues increased from $231.3 million to $455.4 million.
Controller Marisa Dominguez said, “The primary reason for the significant differences between the two reporting periods is the increase in member enrollment. On September 1, 2013 the Partnership HealthPlan of California expanded Medicaid services into eight additional counties in Northern California. Additionally, member enrollment increased effective January 1, 2014 due to the Affordable Care Act and the changes in eligibility requirements for Medi-Cal.”
Our next report will focus on the six months ending June 30, 2014 compared to the six months ending June 30, 2014.
David Peel is the Publisher of the California Healthcare News, a trade journal and web site of interest to California hospital, clinic, provider organization and health insurance professionals. He has served as the Chief Financial Officer of three west coast health insurance companies. He can be reached at 425-577-1334 or firstname.lastname@example.org.