Monthly member premiums collected by Colorado’s health-maintenance organizations rose again in 2009, posting a 6.2 percent increase, according to a report released Wednesday.
The average monthly HMO premium was $317, up from $298 in 2008, the Colorado Health Market Review 2010 reported. Premiums have risen every year since 1998, when the average was $110 a month.
Anthem Blue Cross and Blue Shield’s HMO Colorado, and PacifiCare and UnitedHealthcare, which have merged, had the biggest increases at 19.9 percent and about 17 percent, respectively.
Anthem spokeswoman Sally Kwes kin said the premium increase was made mainly to keep up with medical trends and that HMO Colorado’s average monthly premiums, at $327, are middle-of-the-pack.
UnitedHealthcare said premium changes “are the direct result of increases in underlying medical costs,” noting that it has relatively few HMO members in Colorado compared with its PPO and self-funded plans.
Rising premiums didn’t translate into higher profits at Colorado’s HMOs in 2009. Medical expenses rose 11.8 percent per member. The HMOs earned a collective $127 million in income, compared with $224 million a year earlier. Colorado HMOs earned an average of $130 in net income per member in 2009.
“Historically, if you were able to keep your premium revenue ahead of your medical expenses, that was a recipe for success,” said Minneapolis- based health care industry analyst Allan Baumgarten, author of the report. “That appears to be getting more difficult.”
Baumgarten’s annual report also showed that Denver-area hospitals earned strong profits in 2009, with pretax net income as a percentage of patient revenue, a proxy for profit margin, climbing to 12.9 percent from 8 percent in 2008.
The HealthOne system, a partnership between Nashville, Tenn.-based health care giant HCA and the nonprofit Colorado Health Foundation, profited the most, earning $367 million in pretax income in the Denver market last year, a margin of nearly 21 percent, according to the report. Nonprofit Centura Health and Exempla Healthcare had margins of about 7 percent; Children’s Hospital’s margin was just less than 25 percent, and University Hospital’s was 11 percent.
Baumgarten’s report used financial data hospitals provide to Medicare.
HealthOne spokeswoman Linda Kanamine said the profit numbers appeared high, though HealthOne doesn’t release its financials. But she said strong profits show Health One is holding the line on costs while attracting new customers.
Colorado’s hospitals and HMOs may struggle during the next few years as health-plan enrollments decline because of unemployment and fewer people participating in health care programs as a result, Baumgarten said. But he expects that to begin turning around in 2014 because of the new federal health care reforms.
Greg Griffin: 303-954-1241 or ggriffin@denverpost.com
