Health Net 2010 Annual Report Download - page 69

December 31, 2010 Compared to December 31, 2009
Total Western Region Operations enrollment at December 31, 2010 was approximately 2.9 million
members, a decrease of 1.9 percent compared with enrollment at December 31, 2009. Total enrollment in our
California health plan remained the same at approximately 2.2 million members from December 31, 2009 to
December 31, 2010.
Western Region Operations commercial enrollment declined by 4.4 percent from December 31, 2009 to
approximately 1.4 million members at December 31, 2010. Enrollment in our large group segment declined by
5.1 percent or 51,000 members to 950,000 members at December 31, 2010. Enrollment in our small group and
individual segment in the Western Region Operations decreased by 1.6 percent, from 440,000 members at
December 31, 2009 to 433,000 members at December 31, 2010, consistent with the overall weak employment
levels in our Western markets. Partially offsetting the decrease in membership from the weak economy was a
15.2 percent increase, or 42,000 new members, in our tailored network products from December 31, 2009 to
December 31, 2010. As of December 31, 2010, tailored network products accounted for 23 percent of our
Western Region Operations commercial enrollment compared with 19 percent at December 31, 2009.
Enrollment in our Medicare Advantage plans in the Western Region Operations at December 31, 2010 was
222,000 members, a decrease of 2.2 percent compared with December 31, 2009. The decline in Medicare
Advantage membership was due to a loss of 16,000 members in Arizona and 4,000 members in California,
partially offset by a gain of 15,000 members in Oregon. Membership in our Medicare PDP plans was 427,000 at
December 31, 2010, a 7.2 percent decrease compared with December 31, 2009. This decline in Medicare PDP
membership was primarily driven by the suspension of the auto-assignment of LIS-eligible Medicare
beneficiaries under CMS’ LIS auto-assignment process, effective February 1, 2010 and changes in our
termination policy for nonpayment of member premiums.
In November 2010, CMS imposed sanctions against us suspending the marketing to and enrollment of new
members into all of our Medicare Advantage, MAPD and PDP products. These sanctions relate to our
compliance with certain Medicare rules and regulations. While we cannot enroll new members into these
products until CMS lifts the sanctions, the enrollment status of our current members, including PDP and MAPD
members, is not impacted by this action. We continue to provide benefits to and serve our current PDP and
MAPD members, and are actively working with CMS to resolve their concerns. Prior to the sanctions imposed by
CMS, our Medicare Part D plans were offered in 49 states and the District of Columbia in 2010, and were offered
in all 50 states and the District of Columbia in the year ended December 31, 2009. See “Item 1A. Risk Factors—
Medicare programs represent a significant portion of our business and are subject to risk.”
We participate in the state Medicaid program in California, where the program is known as Medi-Cal.
Medi-Cal enrollment as of December 31, 2010, increased by 44,000 members or 5.1 percent, from December 31,
2009 to 901,000 members. We attribute the increase in Medicaid enrollment to an increase in the Medicaid-
eligible population due to continuing high unemployment and downturn in economic conditions.
December 31, 2009 Compared to December 31, 2008
Total Western Region Operations enrollment at December 31, 2009 was approximately 3.0 million
members, a decrease of 4.9 percent compared with enrollment at December 31, 2008. Total enrollment in our
California health plan decreased 1.3 percent from December 31, 2008 to December 31, 2009.
Western Region Operations commercial enrollment declined by 10.4 percent from December 31, 2008 to
approximately 1.4 million members on December 31, 2009. Small group and individual enrollment in the
Western Region Operations decreased by 12.0 percent, from 500,000 at December 31, 2008 to 440,000 at
December 31, 2009, and our large group enrollment declined by 9.7 percent, from 1.1 million members in 2008
to 1.0 million members in 2009. These declines were primarily driven by the weak economic environment.
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