Health Net 2014 Annual Report Download - page 26

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“expects,” “may,” “should,” “could,” “estimate,” “intend,” “feels,” “will,” “projects” and other similar expressions are
intended to identify forward-looking statements. Actual results could differ materially from those expressed in, or
implied or projected by the forward-looking information and statements due to, among other things, health care reform
and other increased government participation in and taxation or regulation of health benefits and managed care
operations, including but not limited to the implementation of the Patient Protection and Affordable Care Act and the
Health Care and Education Reconciliation Act of 2010 (collectively, the "ACA") and related fees, assessments and
taxes; our ability to successfully participate in California’s Coordinated Care Initiative, which is subject to a number of
risks inherent in untested health care initiatives and requires us to adequately predict the costs of providing benefits to
individuals that are generally among the most chronically ill within each of Medicare and Medi-Cal and implement
delivery systems for benefits with which we have limited operating experience; our ability to successfully participate in
the federal and state health insurance exchanges under the ACA, which involve uncertainties related to the mix and
volume of business that could negatively impact the adequacy of our premium rates and may not be sufficiently offset
by the risk apportionment provisions of the ACA; increasing health care costs, including but not limited to costs
associated with the introduction of new treatments or therapies; our ability to reduce administrative expenses while
maintaining targeted levels of service and operating performance, including through our master services agreement with
a subsidiary of Cognizant; whether we receive required regulatory approvals for Cognizant’s provision of services to us
and any conditions imposed in order to obtain such regulatory approvals; our ability to recognize the intended cost
savings and other intended benefits of the Cognizant transaction; the risk that Cognizant may not perform contracted
functions and services in a timely, satisfactory and compliant manner; negative prior period claims reserve
developments; rate cuts and other risks and uncertainties affecting our Medicare or Medicaid businesses; trends in
medical care ratios; membership declines or negative changes in our health care product mix; unexpected utilization
patterns or unexpectedly severe or widespread illnesses; failure to effectively oversee our third-party vendors;
noncompliance by our or our business associates with any privacy laws or any security breach involving the
misappropriation, loss or other unauthorized use or disclosure of confidential information; the timing of collections on
amounts receivable from state and federal governments and agencies; litigation costs; regulatory issues with federal and
state agencies including, but not limited to, the California Department of Managed Health Care and Department of
Health Care Services, the Arizona Health Care Cost Containment System, the Centers for Medicare & Medicaid
Services, the Office of Civil Rights of the U.S. Department of Health and Human Services and state departments of
insurance; operational issues; changes in economic or market conditions; investment portfolio impairment charges;
volatility in the financial markets; and general business and market conditions.
Additional factors that could cause our actual results to differ materially from those reflected in forward-looking
statements include, but are not limited to, the risks set forth below, and the other risks discussed in our other filings with
the SEC.
Any or all forward-looking statements in this Annual Report on Form 10-K and in any other public filings or
statements we make may turn out to be wrong. They can be affected by inaccurate assumptions we might make or by
known or unknown risks and uncertainties. Many of the factors discussed below will be important in determining future
results. These factors should be considered in conjunction with any discussion of operations or results by us or our
representatives, including any forward-looking discussion, as well as information contained in press releases,
presentations to securities analysts or investors or other communications by us. You should not place undue reliance on
any forward-looking statements, which reflect management's analysis, judgment, belief or expectation only as of the
date thereof and are subject to changes in circumstances and a number of risks and uncertainties. Except as may be
required by law, we do not undertake to address or update forward-looking statements.
Federal health care reform legislation has had and will continue to have an adverse impact on the costs of operating
our business and a failure to successfully execute our operational and strategic initiatives with respect thereto could
adversely affect our business, cash flows, financial condition and results of operations.
The ACA transformed the U.S. health care system through a series of complex initiatives. While we have
experienced significant growth in our revenues and membership in certain products as a result of the ACA, the
measures initiated by the ACA and the associated preparation for and implementation of these measures have had, and
will continue to have, an adverse impact on, among other things, the costs of operating our business, and could
materially adversely affect our business, cash flows, financial condition and results of operations. Due in part to the
magnitude, scope and complexity of these initiatives, as well as the continuing uncertainties related to their ongoing
implementation and evolution, the ultimate impact of the ACA on us remains difficult to predict.
The ACA imposes significant fees, assessments and taxes on us and other health insurers, health plans and
industry participants. Among others, the ACA imposes a significant non-deductible tax (technically called a “fee”) on