Health Net 2002 Annual Report Download - page 33

Membership in the federal Medicare program
decreased by approximately 56,000 members or 21% at
December 31, 2001 compared to the same period for 2000
primarily due to the following:
■Decrease of 45,000 members in Florida due to the sale
of the Florida health plan effective August 1, 2001, and
■Decrease of 11,000 members in Arizona due to our exit
from unprofitable counties.
Membership in state programs (including Medicaid)
increased by approximately 122,000 members or 18% at
December 31, 2001 compared to the same period for 2000
primarily due to the following:
■Increase of 115,000 members in California primarily in
Los Angeles County,
■Increase of 29,000 members in Connecticut and New
Jersey, partially offset by
■Decrease of 22,000 members in Florida due to the sale of
the Florida health plan effective August 1, 2001.
Discontinued plans in 2000 included our membership
in Washington. We no longer had any membership in this
plan as of December 31, 2001.
Government contracts covered approximately 1.5
million eligible individuals under the TRICARE program
at December 31, 2001 and 2000. 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.
HEALTH PLAN SERVICES PREMIUMS
2002 Compared to 2001
Health Plan Services premiums increased $8.2 million or
0.1% for the year ended December 31, 2002 as compared
to the same period in 2001. Our Health Plan Services
premiums, excluding the Florida health plan sold effective
August 1, 2001, increased by $348.0 million or 4% for the
year ended December 31, 2002 as compared to the same
period in 2001, primarily due to the following:
■Increase in commercial premiums of $327.9 million or
6% for the year ended December 31, 2002 as compared
to the same period in 2001 is due to a 13% increase in
premiums on a PMPM basis partially offset by a 7%
decrease in member months. The premium increases on a
PMPM basis were in large, small and individual groups
across all states averaging 11%, 13% and 7%, respec-
tively. The majority of the decrease in member months
were from non-renewal of members in our large group
HMO product in California and Arizona, offset by
■Decrease in Medicare risk premiums of $157.3 million or
10% for the year ended December 31, 2002 as compared
to the same period in 2001 is due to a 16% decrease in
member months, partially offset by a 7% increase in
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premium yields on a PMPM basis. The decrease in
member months is from exiting certain unprofitable
counties and the sale of our Florida health plan, and
■Increase in Medicaid premiums of $173.0 million or
18% for the year ended December 31, 2002 as
compared to the same period in 2001 is due to a 15%
increase in member months and a 3% increase in
premiums on a PMPM basis. These increases are
primarily from membership increases in the Healthy
Families program in California.
2001 Compared to 2000
Health Plan Services premiums increased $966.6 million or
13% for the year ended December 31, 2001 compared to
the same period in 2000 primarily due to the following:
■Increase in commercial premiums of $718.5 million or
15% is due to average commercial premium rate
increases of 11% combined with a 4% increase in
member months. Excluding Arizona, all our health plans
experienced growth in commercial membership,
■Increase in the federal health program of $41.3 million
or 3% is due to an 8% increase in the premium yield
which reflects the Medicare+Choice reimbursement
increase that was effective January 1, 2001, partially
offset by a 5% decrease in member months, and
■Increase in state health programs of $211.2 million or
28% is driven by rate increases of 8% in California and
a 20% increase in member months for the year ended
December 31, 2001.
Our 10 largest employer groups accounted for
approximately 15% of premium revenue for the years
ended December 31, 2002, 2001 and 2000, respectively.
Our premium revenue from the federal Medicare program
accounted for 17%, 21% and 23% of premium revenue
for the years ended December 31, 2002, 2001 and 2000,
respectively. Our premium revenue from the state
Medicaid programs accounted for 13%, 11% and 10% of
premium revenue for the years ended December 31, 2002,
2001 and 2000, respectively.
GOVERNMENT CONTRACTS REVENUES
2002 Compared to 2001
Government Contracts revenues increased by $159.6
million or 11.9% for the year ended December 31, 2002
as compared to the same period in 2001. This increase is
primarily due to increases in risk sharing revenues from
increased health care estimates and higher change order
costs. In addition, heightened military activity during 2002
contributed to the revenue increase.