Health Net 2002 Annual Report Download - page 32

■Decrease in Arizona of 11,000 members because we
closed enrollment in that state effective January 2002 to
avoid adverse selection from a change in one of our
competitors’ benefits, and
■Decrease in Pennsylvania of 8,000 members as our with-
drawal from the Pennsylvania Medicare program was
completed in December 2002.
Membership in the Medicaid programs increased by
approximately 86,000 members or 11% at December 31,
2002, compared to the same period for 2001, primarily
due to the following:
■Increase in California of 70,000 members, primarily from
strong promotions by the State of California of the Healthy
Families program. The Healthy Families program provides
health insurance to children from low-income families, and
■Increase in Connecticut and New Jersey of 16,000
members due to expansion of Medicaid eligible
population.
Government contracts covered approximately
1.5 million eligible individuals under the TRICARE program
at December 31, 2002 and 2001. Dependents of active-
duty military personnel and retirees and their dependents
are automatically eligible to receive benefits under the
TRICARE program. Any changes in the eligibility reflect
the timing of when the individuals become eligible. We
expect the call up of reservists to meet the nation’s height-
ened military activities to increase the number of eligibles.
2001 Membership Compared to 2000 Membership
Commercial membership decreased by approximately
11,000 members or less than 1% at December 31, 2001,
compared to the same period for 2000, primarily due to
the following:
■Decrease of 109,000 members in Florida due to the sale
of the Florida health plan effective August 1, 2001,
■Decrease of 132,000 members in Arizona primarily due
to membership losses in the large group market. The loss
of the State of Arizona employer group accounted for
65,000 of the membership loss,
■Combined decreases of 43,000 members in Oregon and
Connecticut in the large group market attributable to
premium rate increases, partially offset by
■Increase of 206,000 members in California, primarily
due to enrollment increases of 103,000 members within
the small group market most notably as a result of the
growth of 84,000 members in our PPO product in 2001,
41,000 members in individual growth, and 60,000
members in the large group market, and
■Increase of 67,000 members in New Jersey due to
membership increases equally distributed between the
small group and large group markets.
2002 Membership Compared to 2001 Membership
Commercial membership decreased by 138,000 members
or 5% at December 31, 2002 compared to the same period
in 2001. The net decrease in commercial membership is
primarily due to planned exits from unprofitable large
employer group accounts offset by increases in enrollment
in key products and markets that we have been targeting
in an effort to achieve a greater product diversity. These
changes have resulted in the following:
■Net decrease in California of 72,000 members as a result
of a 172,000 member decrease in our large group HMO
market. This decline reflects disenrollment of our HMO
members due to premium rate increases averaging 14%
from December 2001. Membership declines in California
Public Employees’ Retirement System (CalPERS)
accounted for 55,000 members of the decline in the large
group market. This decline is partially offset by a
100,000 membership increase in our PPO/POS products
in the small group and individual markets,
■Decrease in Arizona of 49,000 members as a result of
membership decreases in our large group HMO market.
This decline reflects disenrollment of our HMO members
due to premium rate increases averaging 17% from
December 2001,
■Decrease in New York of 13,000 members as a result of
membership decreases in our large group HMO market.
This decline reflects disenrollment of our HMO members
due to premium rate increases averaging 17% from
December 2001, and
■Decrease in Connecticut of 28,000 members in our large
group is offset by an increase in New Jersey of 28,000
members in our small group.
During April 2002, CalPERS announced that we
would no longer be one of the health insurance carriers
available to its members. Effective January 1, 2003, the
remaining 175,000 members from CalPERS were no
longer enrolled in any of our plans.
We have been targeting greater product and segment
diversity, and we expect our product mix to continually
change as we add membership in small group and indi-
vidual markets.
Membership in the federal Medicare program
decreased by 40,000 members or 18% at December 31,
2002 compared to the same period in 2001. The decrease
in the federal Medicare program membership is primarily
due to planned exits from unprofitable counties as follows:
■Decrease in California of 17,000 members, including
9,000 CalPERS members who were not offered the
Medicare risk product,
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