Regence’s Five-Year Decline in Oregon Gives Kaiser the Oregon Commercial Insurance Mantle
May 10, 2012 -- Regence BlueCross BlueShield may have witnessed its final months as Oregon’s top insurer in the commercial marketplace. Only five years ago – in 2007–Regence led Kaiser by a margin of 633,510 members as Regence insured over 1.1 million commercially.
When the latest enrollment numbers were revealed by the Oregon Insurance Division, Regence had 468,915 members in Oregon and southwest Washington, a decrease of 1.3 percent since the third quarter last year. This is a contrast to Kaiser Foundation Health Plan of the Northwest which serves 474,409 in the market and witnessed a very slight increase of less than 1 percent in the quarter.
In addition to Regence, two of the state’s seven insurers -- Providence and LifeWise -- also witnessed membership drops in the fourth quarter of 2011. Despite a 1.8 percent decrease in the quarter, Providence increased its membership by 5,808 members to 185,596, contrary to LifeWise which saw a 694 decrease and ended the year with 55,527 members.
The enrollment figures do not reflect self-funded 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.
Paced by double-digit decreases from Regence and Kaiser, net investment gains dropped by a total 15 percent for all seven insurers as five insurers saw decreases compared to last year – ODS turned in a solid year in that category, climbing out of a $2 million deficit in 2010 to a $5.9 million gain in 2011. HealthNet increased 33 percent in the same time period to $4.3 million.
Overall, the state’s seven commercial insurers saw their net income fall 21.7 percent from $193.4 million to $151.4 million. Regence cascaded like a waterfall – down 91 percent – landing at $6.9 million down from $75.2 million in the same period last year. In contrast, LifeWise posted a net income of $4.3 million, a dramatic increase from a posting of $4.2 million in the red last year,
Nearly $6.18 billion was spent on medical expenses for all seven health plans, up 4.5 percent from last year. LifeWise showed a 14.5 percent decrease, consistent with its continued drop in membership throughout 2011. Kaiser’s expenses rose 5.7 percent reflecting its continued rise in members, while Regence saw its medical expenses drop by 5.6 percent despite losing 44,607 members throughout the year.
The health plans spent $476.4 million on administrative costs in 2011, a 2 percent increase from the end of 2010.
LifeWise was the most significant cost-cutting organization with a 24 percent decrease, down to $21.5 million. Regence trailed LifeWise, shedding 18 percent of its administrative costs over the year. ODS' costs surged 113 percent as did Kaiser and Providence--27 and 26 percent-- respectively.
Once again, Kaiser continued to pace the seven insurers with the highest proportion of its premium dollars on medical expenses – 95 percent compared to HealthNet and LifeWise, which spent the lowest amount, 79 percent and 78 percent respectively.
ODS joined Kaiser at the end of 2011 as the only insurer to spend 90 percent on medical expenses. Providence Health Plan, meanwhile, came in strong, devoting 89 percent to that category, and PacificSource landed at 85 percent which represented a 2 percent increase. Overall, Oregon’s insurers spent 89 percent of their premium dollars on medical costs.
At year’s end the seven insurers accounted for almost $1.8 billion in capital and surpluses through the end of the year, an increase of a half-percent compared to 2010. Lifewise saw the largest proportionate gain with a 14 percent increase, while Regence dipped 4 percent. Kaiser, with a 2 percent decrease, joined them as the only group to suffer losses in this category. HealthNet at 11 percent and PacificSource at 10 percent were the only other insurers to witness double-digit gains in capital and surpluses overall.
To review all of the financial statistics from 2011, click here.