BCN Gains In West Area

November 30, 2007
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LANSING — Blue Care Network, the health maintenance organization of Blue Cross Blue Shield of Michigan, has gained 24,000 members in its West region over the past two years, CFO and Senior Vice President Sue Kluge said last week.

Those members are part of a growth pattern that has boosted Blue Care Network to more than a half-million members statewide as it absorbs M-Care, the University of Michigan health coverage plan acquired by BCBSM late last year.

The nonprofit Blue Care Network, headquartered in Southfield, has grown from 43,000 members in the West region in 2005 to 64,000 today, Kluge said.

“We have, on the West region, been trying to watch our premium rate increases to get some new membership growth, and it’s paid off,” Kluge said. “We’re very happy to see the

West growing again. It had gotten stagnant, and when that happens, your population just keeps getting older, and you don’t get that younger mix of people to help the premium rate increases.”

A financially positive 2007 is expected to keep 2008 premium rate hikes below 7 percent, and in some cases below 4 percent if employers are willing to pass along some costs to employees, Kluge said.

Grand Rapids-based Priority Health’s HMO posted a net income of $25.9 million, according to third quarter 2007 financial statements filed last month with the state of Michigan

CFO Greg Hawkins pointed out that the third quarter’s year-to-date net income amounts to 2.5 percent of net premium income of a little more than $1 billion, and underwriting gains represent 1.3 percent.

“That’s not a huge margin by any measure,” Hawkins said. “Our margins are pretty consistent on a percentage basis … in terms of underwriting gain or loss. It’s pretty consistent with what we’ve experienced through the year and consistent with our plans.”

The number of members for Priority Health’s HMO products has slipped by 8.4 percent since the end of 2006, down to 399,474 from 436,357.

Member months were posted at 3.4 million for the third quarter of 2007, down from 4 million at the end of the third quarter of 2006.

“The economy in West Michigan and Michigan as a whole has changed, and that has an impact on our membership in a competitive environment,” Hawkins said. “Members are shifting from the HMO products we’re seeing here to other types of financial mechanisms. All those have an impact on Priority Health’s HMO stand-alone statements.”

Hawkins said all figures have been adjusted to account for Priority Health’s acquisition earlier this year of Care Choices from Trinity Health. Spectrum Health owns about 94 percent of Priority Health. Both are nonprofits.

Grand Rapids-based Grand Valley Health Plan, Michigan’s only staff-model HMO, also is seeing a shrinking membership, according to the third quarter financial statement.

“We’re seeing companies and individuals drop health insurance,” said CEO Ron Palmer. GVHP’s member months were 92,887 at the third quarter, down from 118,673 at the third quarter of 2006. The number of members has dropped to 9,889 year-to-date, compared to 11,698 at the end of 2006.

“Individuals who have to pay a sizeable portion of their health care are just dropping it. We’re absolutely seeing a loss of employment in the community. We’re seeing more companies not offering insurance, especially very small companies,” Palmer said.

The nonprofit GVHP reported a net income of $542,913 on the third quarter statement, on net premium income of $24.8 million. At the same point last year, GVHP was in the red.

Blue Care Network’s third quarter statement reported year-to-date net income of $28 million on net premium income of $1.3 billion. Its 4.4 million member months went up from 4.1 million reported a year ago. Membership was reported at 507,557 at the third quarter, up from 482,998 at the end of 2006.

“We’ve also had a very good year on our pharmaceutical expense trends,” Kluge added. “We’re showing a very high use of generic drugs now. Over 70 percent of our prescriptions are filled with generics. I believe that is the highest in the state and one of the highest in the country.”

As a whole, the nonprofit BCBSM reported $176 million in net income, on $4.6 billion net premium income on its third quarter statement. It recorded an underwriting loss of $58 million.

Member months were at 23.3 million, up from 23.1 million a year ago. The company listed membership at 2.59 million.   

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