Anthem Blue Cross 2002 Annual Report Download - page 50

MANAGEMENT’S DISCUSSION AND ANALYSIS
of Financial Condition and Results of Operations (Continued)
Anthem, Inc. 2002 Annual Report 45
Excluding TRICARE, membership increased 400,000,
or 9%, primarily due to higher BlueCard activity, higher
sales in National Accounts business and higher sales and
favorable retention of Local Large Group business.
East
Our East segment is comprised of health benefit and
related business for members in Connecticut, New
Hampshire and Maine. BCBS-ME is included from its
acquisition date of June 5, 2000. Our East segment’s summa-
rized results of operations for the years ended December 31,
2001 and 2000 are as follows:
Years Ended
December 31
2001 2000 $ Change % Change
($ in Millions)
Operating
Revenue $3,667.3 $2,921.9 $745.4 26%
Operating Gain $ 128.8 $ 103.8 $ 25.0 24%
Operating
Margin 3.5% 3.6% (10) bp
Membership
(in 000s) 2,260 2,093 167 8%
Operating revenue increased $745.4 million, or
26%. Excluding our acquisition of BCBS-ME in June
2000 and the effect of our exit from the Medicare +
Choice business in Connecticut on January 1, 2001, oper-
ating revenue increased $449.0 million, or 20%, primarily
due to premium rate increases in our Local Large Group
business and higher average membership in our Local
Large Group and Small Group businesses.
Operating gain increased $25.0 million, or 24%, pri-
marily due to improved underwriting results in our Local
Large Group fully-insured business, exiting the Medicare
+ Choice market in Connecticut, and higher overall
membership. Operating margin decreased 10 basis points
primarily due to the relatively lower margins on our
Maine business.
Membership increased 167,000, or 8%, primarily due
to increased sales of Local Large Group business and
growth in BlueCard activity. Local Large Group sales in
our East segment increased primarily due to the with-
drawal of two of our largest competitors from the New
Hampshire and Maine markets.
West
Our West segment is comprised of health benefit and
related business for members in Colorado and Nevada. Our
West segment’s summarized results of operations for the
years ended December 31, 2001 and 2000 are as follows:
Years Ended
December 31
2001 2000 $ Change % Change
($ in Millions)
Operating Revenue $774.4 $622.4 $152.0 24%
Operating Gain $ 20.1 $ 2.5 $ 17.6 704%
Operating Margin 2.6% 0.4% 220 bp
Membership
(in 000s) 769 595 174 29%
Operating revenue increased $152.0 million, or 24%,
primarily due to higher premium rates designed to bring our
pricing in line with cost of care and higher membership
in our Local Large Group and Small Group businesses.
Operating gain increased $17.6 million to $20.1 mil-
lion in 2001, primarily due to improved underwriting per-
formance as a result of premium rate increases exceeding
cost of care increases and higher average membership.
This improvement in our operating gain resulted in a 220
basis point increase in operating margin to 2.6% in 2001.
Membership increased 174,000, or 29%, due to
increased BlueCard activity, higher sales in Local Large
Group and Small Group businesses and favorable retention
in National Accounts business. We exited the Medicare +
Choice market in Colorado effective January 1, 2002. At
December 31, 2001, our Medicare + Choice membership
in Colorado was approximately 6,000.
We entered into an agreement with Sloan’s Lake
HMO in Colorado for the conversion of Sloan’s Lake
HMO business effective January 1, 2001. The terms of
the agreement include payment to Sloan’s Lake for each
member selecting our product at the group’s renewal date
and continuing as our member for a minimum of nine
months. Through December 31, 2001, we added approxi-
mately 35,000 members from Sloan’s Lake.