In Florida, Medicare plus means big HMO profits

[1776Forever]

In Florida, Medicare plus means big HMO profits
Medicare Advantage plans in Florida earn huge profits, according to a new study.
BY JOHN DORSCHNER

http://www.miamiherald.com/business/story/935125.html

Humana and Aetna earned the biggest profits among Florida health maintenance organizations in 2007, but CarePlus, which does only Medicare, raked in by far the biggest profits per member, thanks to lucrative payments from the federal government, according to a study being released Friday.

The Obama administration has said that it believes Medicare HMOs are generally getting more money than they deserve. Democratic leaders propose to cut their benefits and use the savings to fund reforms.

''Companies like CarePlus are getting their profitability to a large extent from the federal government,'' said Allan Baumgarten, author of the study, Florida Health Market Review.

He noted that in earlier years, the Medicare HMOs, now called Medicare Advantage Plans, were funded at about 95 percent of what a patient would be expected to cost under fee-for-service.

Under the George W. Bush administration, that rate was increased to 115 percent of fee-for-service, in an attempt to privatize Medicare by pushing members toward commercial insurers.

CarePlus, a subsidiary of Humana, had a profit of $56.2 million with an enrollment of 55,541, according to Baumgarten's report. That worked out to a profit of $1,012 per member.

Meanwhile, the parent Humana, with a broad base of private and Medicare patients, earned $136.7 million on 466,905 members in Florida -- $293 per member. Aetna's Florida operation brought in $100.2 million in profit from 530,423 members -- $189 per member. Health Options, the Blue Cross Blue Shield HMO, earned $49.5 million on 175,096 members -- $282.

In measuring medical loss ratios -- the amount of premiums spent on healthcare -- CarePlus spent 79.5 percent of its funds on patient care, compared to 92.3 percent for the Medicare HMO run by Blue Cross Blue Shield Health Options and 89.8 percent for AvMed's Medicare plan.

For commercial plans, AvMed spent 95.8 percent of premiums on patient care. Humana spent 86.5 percent, Aetna 80.7 percent and Health Options 78.9 percent.

The Baumgarten report is based on data gathered by the state government, which collects this data only from HMOs, not preferred provider or self-insured plans.

Overall, Florida HMOs showed a strong year, posting $702 million in profits, which was 3.9 percent of premiums. That compares with a 4.9 percent return in Arizona, 5 percent in Colorado, 2.4 percent in Michigan and 1.7 percent in Wisconsin.

The report shows that average premiums paid for commercial health insurance, which skyrocketed with double-digit increases from 2000 through 2004, have leveled off recently. In 2007, HMO premiums in Florida climbed 5.7 percent.

Hospitals also were generally prosperous. Baumgarten reported. Those in South Florida pulled in $425 million in net income, or 4.3 percent of patient revenue. That compares with a return of 7.7 percent in the Tampa-St. Petersburg area and 8.3 percent in the Orlando region.

''Looking backward, the situation looks very good,'' said Baumgarten in an interview. ''But looking forward, there are a lot of storm clouds on the horizon.'' The sour economy is expected to increase the ranks of the uninsured, lowering profits for insurers and hospitals.

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Just like Senator Kennedy said, "This is the time!" But let's do it right and get rid of these profit hungry HMO's!

:bounce: