Health Net 2009 Annual Report Download - page 64

West Operations
Commercial premium revenues for our West Operations increased by $259.9 million, or 5%, for the year
ended December 31, 2008 as compared to the same period in 2007. These increases were primarily attributable to
our ongoing pricing discipline and premium rate increases, partially offset by decreases in commercial
membership.
Medicare premiums for our West Operations increased by $624.0 million, or 28%, for the year ended
December 31, 2008 as compared to the same period in 2007. These increases were primarily attributable to
increases in Medicare Advantage and Medicare Part D membership.
Medicaid premiums for our West Operations increased by $61.1 million, or 7%, for the year ended
December 31, 2008 as compared to the same period in 2007. These increases were primarily attributable to an
increase in our Medi-Cal membership.
Northeast Operations
Commercial premium revenues for our Northeast Operations increased by $69.6 million, or 4%, for the year
ended December 31, 2008 as compared to the same period in 2007. These increases were primarily attributable to
our ongoing pricing discipline and premium rate increases, partially offset by decreases in commercial
membership.
Medicare premiums for our Northeast Operations increased by $118.6 million, or 22%, for the year ended
December 31, 2008 as compared to the same period in 2007. These increases were due to an increase in Medicare
Advantage and Medicare Part D membership.
Medicaid premiums for our Northeast Operations decreased by $176.5 million, or 59%, for the year ended
December 31, 2008 as compared to the same period in 2007, primarily due to our withdrawal from the
Connecticut Medicaid program in April 2008.
Health Plan Services Costs
Health plan services costs decreased by $30.7 million, or less than 1% for the year ended December 31,
2009 as compared to the same period in 2008, and increased by $999.8 million, or 10%, for the year ended
December 31, 2008 as compared to the same period in 2007. Health plan MCR was 86.3% at December 31, 2009
compared to 86.9% at December 31, 2008 and 85.4% at December 31, 2007.
Year Ended December 31, 2009 Compared to Year Ended December 31, 2008
Commercial health care costs decreased by $184.1 million, or 3%, for the year ended December 31, 2009 as
compared to the same period in 2008. The increase in the commercial health care cost trend on a PMPM basis
was 7.8% for the year ended December 31, 2009 over the same period in 2008. Commercial MCR increased to
86.1% for the year ended December 31, 2009 from 85.9% for the year ended December 31, 2008, primarily due
to higher utilization related to the H1N1 flu, COBRA and higher-than-expected health care costs in the Northeast
plans. Physician and hospital costs on a PMPM basis rose about 8% and 10%, respectively, from higher
utilization. Pharmacy costs on a PMPM basis rose approximately 7%. The litigation and regulatory-related
charge recorded in 2009 impacted the commercial MCR by 6 basis points and commercial health care cost trend
on a PMPM basis by 70 basis points. The litigation and regulatory-related charge recorded in 2008 impacted the
commercial MCR by 50 basis points and commercial health care cost trend on a PMPM basis by 290 basis
points.
Medicare health care costs increased by $1.5 million, or less than 1%, for the year ended December 31,
2009 as compared to the same period in 2008, and Medicare MCR, including Medicare Advantage and Part D,
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