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Market Turmoil Takes Toll

MANAGED CARE June 2009. © MediMedia USA
News and Commentary

Market Turmoil Takes Toll

MANAGED CARE June 2009. ©MediMedia USA

Health insurance plans’ net income plummeted 36 percent in 2008, according to a recent report by Mark Farrah Associates, a consulting company. The company cites — what else? — the recession and market turmoil.

While overall revenues increased 6.2 percent, from $270 billion in 2007 to $287 billion in 2008, profit margins fell from 6.2 percent to 3.7 percent.

The top eight health plans — Aetna, Cigna, Health Care Service Corp., Health Net, Humana, Kaiser Permanente, UnitedHealth Group, and WellPoint — also saw their membership growth slow.

These eight plans saw substantial write-offs and write-downs of investment portfolios and reductions in investment income. Also, they missed membership growth targets.

In addition, there were increased employee severance charges and escalating medical loss ratios.