| Article |
March 14, 2005
www.modernhealthcare.com
Modern Healthcare
Calif.'s for-profits HMOs spent less premium revenue on care
For-profit California HMOs, as a group, spent considerably less of their premium dollars on patient care than their not-for-profit counterparts, according to the California Medical Association's 12th annual report examining health plan expenditures. Among the 38 HMOs studied, eight of the 10 companies with the lowest medical loss ratios in fiscal 2003-04 were for-profit, while all 10 with the highest medical loss ratios were not-for-profit. Among major insurers, not-for-profit Kaiser Permanente ranked the highest, spending 92.8% of its premium revenue on patient care, 3.2% on administrative costs and 3.9% on profits. For-profit Blue Cross of California, a unit of WellPoint, was the lowest-ranked major insurer, devoting 79.9% of premium revenue to healthcare, 12.3% to administrative costs and 7.8% to profits. California Insurance Commissioner John Garamendi approved the $16.4 billion merger of Anthem and WellPoint Health Networks last year after the companies agreed to numerous concessions, including improving Blue Cross' medical loss ratio.
Overall, not-for-profit Alameda Alliance for Health, a 94,500-member HMO in Alameda, Calif., ranked the highest among all health plans, spending 99.6% of premium dollars on medical care. Not-for-profit SmartCare Health Plan, a 65,000-member Medicare HMO in Long Beach, Calif., ranked the lowest, with a medical loss ratio of 73.8%, down from 91.8% the previous year. The full report is available here. http://www.calphys.org/assets/applets/knox_keene_05.pdf -- by Laura B. Benko lbenko@crain.com