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(St. Paul) ... Premiums collected by all of Minnesota's nonprofit HMOs and health plans covered payouts for patients' medical expenses in 2001, according to annual financial reports filed today with the State of Minnesota. The state's eight health plans collected $5.7 billion in premiums and paid out nearly $5 billion in medical expenses, resulting in a net operating gain of just over 1 percent. The gain allowed health plans to continue to rebuild state-mandated reserves that had declined due to operating losses in the 1990s.
"Minnesota health plans did not have to live off their savings accounts or rely on the stock market to cover losses," said Michael Scandrett, executive director of the Minnesota Council of Health Plans.
A total of $120.7 million was used to rebuild state-mandated reserves, including $44.9 million from investment returns. State HMO law requires a reserve between one and three month's operating expenses. Health plans' reserves are between 1 and 2.8 months. The average is 2 months, up from a low of 1.5 in 1998.
"The good news is that all of the companies were in the black, but a 1 percent margin is a little too close for comfort, in my opinion," Scandrett said.
Other trends evident in the annual financial filings include:
- Medical care expenses increased for the 10th straight year.
- Enrollment in managed care declined slightly.
- Administrative costs averaged 9 percent of premium revenue.
Medical expenses rise, trend expected to continue
Health care costs continued to grow rapidly in 2001, increasing by more than 10 percent per enrollee to $2,063. In all, medical care expenses totaled nearly $5 billion in 2001.
"People are switching to health plan products that allow quick access to the latest drugs and medical technologies, and open access to the doctor and specialist of their choice. Naturally, this adds fuel to the fire of rising health care costs," Scandrett said.
Enrollment declines
Enrollment in 2001 was nearly 2.4 million, down 2.2 percent from 2000. This decrease is largely due to employers switching from traditional HMO plans to products that are subject to fewer state regulations and offer more choices for deductible and co-payment structures, Scandrett said.
State statute requires Minnesota's health plans to submit reports on their financial status. The reports are independently audited to comply with generally accepted accounting principles, standards of the Financial Accounting Standards Board, and definitions and standards promulgated by the National Association of Insurance Commissioners and the State of Minnesota.
Established in 1985, the Minnesota Council of Health Plans is a trade association of 10 licensed nonprofit health plans. Council members have pioneered a style of health care that has improved quality and consumer satisfaction and expanded access to health care for all Minnesotans. The council and its members are leaders in health care reform, practice guidelines development, technology assessment and data collection and analysis.
For information about an individual health plan's numbers, contact:
Karl Oestreich
Director of Media and Public Relations
Blue Plus
Eagan, MN
(651) 662-1502
Tony Solem
CEO
First Plan of Minnesota
Two Harbors, MN
(800) 635-4159
Sara McFee
Director, Corporate Communications
HealthPartners
Bloomington, MN
(952) 883-5301
Larry Bussey
Director of Communications
Medica
Minnetonka, MN
(952) 992-8013
Bonnie Hays
Director of Marketing and Public Relations
Metropolitan Health Plan
Minneapolis, MN
(612) 337-7160, office
(612) 818-2735, pager
Mike Umland
Vice President - Finance
PreferredOne
Golden Valley, MN
(763) 847-3204
Ruth Krystopolski
Vice President, Managed Care Services
Sioux Valley Hospitals and Health System
Sioux Falls, SD
(605) 328-6801
Ghita Worcester
Vice President, Public Affairs & Development
UCare Minnesota
Minneapolis, MN
(612) 676-3634
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