Florida HMOs gain members for first time in 10 years
Humana leads industry with $360 million profit
May 10, 2010
Florida HMOs last year reversed a 10-year plunge in popularity by gaining members for the first time since 1999, and as a result saw profits jump, new state figures show.
The down economy fueled the jump in membership among the 32 health maintenance organizations in Florida, as many people who lost jobs landed in Medicaid health plans and more seniors cutting their costs chose Medicare HMOs, experts said.
Total HMO enrollment came in at almost 3.6 million, up 4 percent from the low set in 2008 but still down from the peak of 5 million in 1999, according to new figures from the state Office of Insurance Regulation.
“It’s a big deal for the industry to see this,” said Allen Baumgarten, a Minneapolis consultant who tracks HMOs in 12 states including Florida.
“Nationally, enrollment in HMOs [in the workplace] continues to fall, but with so many more going into Medicaid and Medicare, the number of enrollees actually went up in Florida,” Baumgarten said.
Floridians paid $18.75 billion in premiums to HMOs last year, and it cost them about 5.6 percent more. The average annual premium for an HMO member was $5,281 last year, up from $5,000 the year before, according to figures in the report.
The uptick helped HMO profits rise 19 percent, to $575 million. The industry leader, Humana, raked in $360 million in profit from its Florida Medicare, workplace and Medicaid HMOs.
HMOs in Florida have been on a downward slide since their practice of tightly controlling medical care to hold down costs grew increasingly unpopular with the public. The anger reached pop culture in the 1997 Jack Nicholson and Helen Hunt movie “As Good As It Gets.”
Since then, employers stepped up their offerings in PPOs — preferred provider organizations — and other types of plans that give more flexibility than HMOs, Baumgarten said. Also, more employees switched to high-deductible plans with health savings accounts that carry tax breaks.
Medicare insurers also began offering seniors new choices, including PPOs, fee-for-service plans and staying on Medicare with a drug plan.
But when the economic collapse bit into seniors’ savings, more moved to less-costly HMOs, said Becky Cherney, chief executive of the nonprofit Florida Health Care Coalition in Orlando. At least 1 million more have gone on Florida Medicaid, some choosing HMOs.
But Cherney said HMOs continue to fall in the workplace. Employers are trimming costs by choosing plans that are stricter on medical care, but some PPOs are doing that for lower premiums than HMOs, Cherney said.
The rules will be getting tougher on Medicare managed care plans, Cherney said. By 2014, the federal health overhaul law passed by Congress this year will penalize plans that spend more than 15 percent on administration and other non-medical costs. Few now meet that standard, Cherney said.
“The scrutiny is coming for insurance companies. How much are you spending on administration and how much are you spending on big salaries?” she said.
Officials at the the Florida Association of Health Plans, which represents HMOs, and the state were not immediately available to comment.