Health Net 2011 Annual Report Download - page 78

The Medicare Advantage MCR in the Western Region Operations was 90.3 percent for the year ended
December 31, 2011 compared with 88.8 percent for the year ended December 31, 2010. The Medicare PDP
(stand-alone) MCR was 84.1 percent for the year ended December 31, 2011 compared with 77.2 percent for the
same period in 2010. Total Medicare MCR in the Western Region Operations was 89.3 percent for the year
ended December 31, 2011 compared to 86.9 percent for the same period in 2010. These increases are due to the
adverse effect of enrollment declines driven by our inability to enroll new members due to the sanctions imposed
against us by CMS in 2010.
The Medicaid MCR was 85.5 percent for the year ended December 31, 2011 compared with 87.7 percent for
the year ended December 31, 2010. This decrease is due to an increase in the premium yield outpacing the
increase in the Medicaid health care cost trend.
G&A, Selling and Interest Expenses
G&A expense in the Western Region Operations was $926.7 million for the year ended December 31, 2011
compared with $881.8 million for the year ended December 31, 2010. The G&A expense ratio was flat at 8.9
percent for each of the years ended December 31, 2010 and 2011.
Selling expense in our Western Region Operations was $238.0 million for the year ended December 31,
2011 compared with $235.6 million for the year ended December 31, 2010. The selling costs ratio was 2.3
percent and 2.4 percent for each of the years ended December 31, 2011 and 2010, respectively.
Interest expense was $32.0 million for the year ended December 31, 2011 compared with $34.9 million for
the year ended December 31, 2010. The year over year decline is due to lower letter of credit fees.
Year Ended December 31, 2010 compared to Year Ended December 31, 2009
Revenues
Total revenues in the Western Region Operations in the year ended December 31, 2010 were flat at $10.0
billion compared to the same period in 2009. Health plan services premiums revenues in the Western Region
Operations increased less than 1 percent to $9.9 billion for the year ended December 31, 2010 compared to the
same period in 2009.
Investment income in the Western Region Operations increased to $70.3 million for the year ended
December 31, 2010 from $67.6 million for the same period in 2009 due to the strong performance of our
investment portfolio and gains taken during the year.
Health Plan Services Expenses
Health plan services expenses in the Western Region Operations were $8.6 billion for the year ended
December 31, 2010 compared to $8.5 billion for the year ended December 31, 2009.
Commercial Premium Yield and Health Care Cost Trends
In the Western Region Operations, commercial premium yields PMPM increased by 7.9 percent to
approximately $341 for the year ended December 31, 2010 compared with approximately $316 in the same
period of 2009. This increase was due to continued pricing discipline.
Commercial health care costs PMPM in the Western Region Operations increased by 7.1 percent to
approximately $294 in the year ended December 31, 2010 compared to an increase of 9.6 percent to
approximately $274 in the year ended December 31, 2009. The commercial health care cost trend continued to
increase for 2010, but at a slower rate than 2009, as 2009 was impacted by higher utilization related to the H1N1
flu and COBRA.
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