Health Net 2000 Annual Report Download - page 23

Management’s Discussion and Analysis of Financial Condition and Results of Operations HEALTH NET 21
Excluding the discontinued plans, commercial mem-
bership increased 5% to approximately 3.0 million mem-
bers at December 31, 2000 compared to 2.9 million
members at December 31, 1999 due to membership
increases in California primarily in point of service
(“POS”) products and in Connecticut and New York in
small, mid-market, and large groups.
Excluding the discontinued plans, Medicare member-
ship increased 4% to 272,000 members at December 31,
2000 compared to 262,000 members at December 31,
1999 primarily due to growth in Florida and California.
Excluding the discontinued plans, Medicaid member-
ship increased 8% to 666,000 members at December 31,
2000 compared to 619,000 members at December 31,
1999 primarily due to increases in the Healthy Families
program in California.
Excluding the discontinued plans, commercial
membership declined 5% to 2.9 million members at
December 31, 1999 compared to 3.0 million members
at December 31, 1998 primarily due to membership
losses attributable to planned membership attrition from
rigorous pricing actions.
Excluding the discontinued plans, Medicare member-
ship declined 15% to 262,000 members at December 31,
1999 compared to 309,000 members at December 31,
1998 primarily due to the Company exiting certain
unprofitable counties primarily in its Northeast health plans.
Excluding the discontinued plans, Medicaid mem-
bership increased 12% to 619,000 members at December
31, 1999 compared to 555,000 members at December
31, 1998 primarily due to increased sales in the Healthy
Families program in California.
Government contracts covered approximately 1.5 mil-
lion eligible individuals under the TRICARE program at
December 31, 2000. Dependents of active-duty military
personnel and retirees and their dependents are automati-
cally eligible to receive benefits under the TRICARE
program. Any changes in the enrollment reflect the tim-
ing of when the individuals become eligible.
health plan services premiums
Health Plan Services premiums increased $320.0 million
or 5% for the year ended December 31, 2000 compared to
the same period in 1999 primarily due to the following:
• Average commercial premium rate increases of 11%,
• Average Medicare premium rate increases of 14%, and
• Average Medicaid premium rate increases of 2%,
partially offset by
• Net membership decrease of 0.9%.
Health Plan Services premiums decreased $93.1 mil-
lion or 1% for the year ended December 31, 1999 com-
pared to the same period in 1998 primarily due to
enrollment in the Company’s health plans declining by
228,000 members. 71,000 members were from divested
health plans.This was partially offset by average premium
rate increases of 8% for commercial product lines, 7% for
Medicare product lines, and 5% for Medicaid product lines.
government contracts/specialty services
Government Contracts/Specialty Services segment rev-
enues increased $93.3 million or 6% for the year ended
December 31, 2000 compared to the same period in
1999.The increase was primarily due to an increase in
TRICARE revenues comprised of:
• Higher health care costs resulting in higher risk share
revenues from the Government, and
• Increased change orders and bid price adjustments.
This increase in TRICARE revenues was primarily
due to the continuing shift in health care utilization
from military facilities to civilian facilities for the three
Enrollment Information
The table below summarizes the Company’s enrollment information for the last three fiscal years.Total at-risk insured
enrollment decreased by approximately 1% to approximately 3.9 million members at December 31, 2000 compared to
enrollment at December 31, 1999.Total insured enrollment decreased by approximately 5% to approximately 4.0 million
members at December 31, 1999 compared to enrollment at December 31, 1998.
Year Ended December 31, Percent Percent
(Amounts in thousands) 2000 Change 1999 Change 1998
Health Plan Services:
Commercial 2,996 4.7% 2,862 (4.9)% 3,008
Medicare 272 3.8% 262 (15.2)% 309
Medicaid 666 7.6% 619 11.5% 555
Continuing plans 3,934 5.1% 3,743 (3.3)% 3,872
Discontinued plans 3 (98.7)% 228 (30.3)% 327
Total Health Plan Services 3,937 (0.9)% 3,971 (5.4)% 4,199
Government Contracts:
TRICARE and Indemnity 562 (12.7)% 644 (17.9)% 784
TRICARE HMO 901 5.8% 852 8.8% 783
Total Government Contracts 1,463 (2.2)% 1,496 (4.5)% 1,567
ASO 83 (19.4)% 103 (33.1)% 154