Aetna 2012 Annual Report Download - page 16

Annual Report- Page 10
Medicare results for 2012 reflect higher underwriting margins and an increase in membership compared to
2011.
Medicare premiums increased approximately $766 million in 2012 compared to 2011 and decreased approximately
$411 million in 2011 compared to 2010. The increase in 2012 is primarily due to membership growth in Medicare
Advantage and the full-year impact of the addition of Genworth's Medicare Supplement business, which we
acquired in October 2011. The decrease in 2011 is primarily attributable to lower membership in our Medicare
Advantage business, partially offset by the addition of the acquired Medicare Supplement business.
Our Medicare MBRs were 83.8%, 84.0% and 87.3% for 2012, 2011 and 2010, respectively. There was no
significant development of prior-years' health care cost estimates in 2012. We had approximately $29 million and
$40 million of favorable development of prior-years' health care cost estimates in 2011 and 2010, respectively. Our
Medicare MBR declined slightly in 2012 compared to 2011 as an increase in the proportion of Medicare
Supplement business, which has a lower MBR, was mostly offset by more competitive pricing intended to drive
improved sales. The decrease in our Medicare MBR in 2011 compared to 2010 primarily reflects lower utilization
of medical services and higher risk-adjusted CMS revenue.
Medicaid results for 2012 reflect continued revenue growth.
In 2012 and 2011, our Medicaid business experienced significant growth. Medicaid premiums increased
approximately $237 million in 2012 compared to 2011 as a result of our in-state expansions, including membership
increases in certain high acuity Medicaid contracts with greater per-member premium rates, primarily in Delaware
and Illinois, and from our expanded presence in Missouri. These increases more than offset the decline in premium
from other membership losses. During 2011, our Medicaid premiums were $358 million higher than 2010 as we
added approximately 73 thousand medical members.
Other Sources of Revenue
Health Care fees and other revenue for 2012 increased $132 million compared to 2011 primarily as a result of the
full-year impact of the revenues from our 2011 acquisitions. Health Care fees and other revenue for 2011 increased
$191 million compared to 2010 primarily as a result of higher health care administration fee yields, primarily due to
higher pharmacy benefit management fees, and the inclusion of revenues from our 2011 acquisitions.
General and Administrative Expenses
General and administrative expenses increased $76 million during 2012 compared to 2011 due primarily to the full
year impact of operating expenses associated with our 2011 acquisitions and incremental investment spending on
growth initiatives partially offset by continued execution of our expense reduction initiatives. General and
administrative expenses increased $520 million during 2011 compared to 2010, due primarily to the inclusion of
expenses associated with our 2011 acquisitions and incremental investments to promote growth. Additionally,
included in 2010 results are litigation-related insurance proceeds which lowered general and administrative
expenses.