Shedding members, padding surplus and increasing profits continued
September 1, 2010 -- Oregon’s eight largest health insurers continued to shed members and increase profits in the first six months of this year, based on the industry’s latest financial statements released by the Oregon Insurance Division.
In six months alone this year, the group of eight earned more than $100 million in net income, matching their total profits for all of 2009
. Most of those gains– some $61.8 million – however, came from investment earnings and not from the business of selling health insurance.
The amount they held in surplus, meanwhile, rose 13 percent from last year, up to $1.9 billion.
The Oregon insurance companies – led by Regence Blue Cross Blue Shield of Oregon, Kaiser Permanente and Providence Health Plans – covered almost 10 percent fewer lives on June 30 than at the beginning of the year, down to 1.6 million Oregonians. These enrollment figures do not reflect self-funded groups and other public employee groups such as the Public Employees’ Benefit Board, which covers state employees and the Oregon Educators Benefit Board, which includes public school teachers and administrators
Also in the first six months of this year, Oregon insurers took in $3.5 billion in premiums from individuals and businesses – down 5.5 percent from the same time last year. They spent more than $3.1 billion on medical expenses, which too were down 6.7 percent from last year.
Prescription drug costs, meanwhile, jumped to $525.3 million – up 56 percent from the same time last year. Overall profitability – net income to premiums earned – hovered at 3 percent.
Leading the pack was Regence, which insured the largest number of groups and individuals -- 581,490 people -- at the end of June, a far cry from the nearly 1 million members it held in 2008. Most of its losses occurred in the individual market, where rates have skyrocketed.
In the first six months of this year, Regence earned a 4.5 percent profit margin from nearly $1 billion in premium revenue. It also took 14 percent off the top for claims adjustment and general administrative costs while socking away an extra $30 million in surplus which now amounts to close to $600 million in a rainy day fund.
Kaiser, the second largest insurer collected the most premiums -- $1.2 billion – while recording a 1.3 percent profit margin and just 5.6 percent in claims and administrative expenses.
LifeWise spent the most on claims and administrative costs – roughly 21.6 percent of $96.2 million in premiums – while showing the leanest amount in the profit column at the end of the quarter.
LifeWise, along with ODS, recorded net income deficits so far this year.
For a fuller picture of Oregon insurance financials see the Insurance Division's annual reports here.
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