Health Net 2004 Annual Report Download - page 7

New Jersey was 209,516 as of December 31, 2004 (including 111,237 members under The Guardian arrangement), which represented
a decrease of approximately 29% during 2004. This decrease was primarily due to the implementation of higher premiums during
2004. Our Medicaid membership in New Jersey was 42,034 as of December 31, 2004, which represented a decrease of approximately
7% during 2004. We did not have any Medicare members in New Jersey as of December 31, 2004 or 2003.
We believe our New York HMO and PPO operations make us the tenth largest managed care provider in terms of membership
and the fifth largest in terms of size of provider network in New York. In New York, we had 251,967 commercial members as of
December 31, 2004, which represented a decrease of approximately 7% during 2004. This decrease was primarily due to the
implementation of higher premiums during 2004. Such membership included 107,657 members under The Guardian arrangement.
Our Medicare membership in New York was 5,739 as of December 31, 2004, which represented an increase of 1% during 2004. We
did not have any Medicaid members in New York as of December 31, 2004 or 2003.
Medicare Products
We offer our Medicare products directly to individuals and through employer groups. To enroll in one of our Medicare plans,
covered persons must be eligible for Medicare. We provide or arrange health care services normally covered by Medicare, plus a
broad range of health care services not covered by traditional Medicare programs. The federal Centers for Medicare & Medicaid
Services (“CMS”) pays us a monthly amount for each enrolled member based, in part, upon the “Adjusted Average Per Capita Cost,”
as determined by CMS’ analysis of fee-for-service costs related to beneficiary demographics and other factors. Depending on plan
design and geographic area, we may charge a monthly premium. We also provide Medicare supplemental coverage to 39,066
members through either individual Medicare supplement policies or employer group sponsored coverage.
On December 8, 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 was signed into law. As a
result of this legislation, Medicare private market plans are in the process of changing their names from Medicare+Choice to
Medicare Advantage. The name change will become fully effective in 2006. See “Government Regulation—Federal Legislation and
Regulation—Medicare Legislation” and “Risk Factors—Our businesses are highly regulated” for additional information regarding the
Medicare legislation.
Our Medicare Advantage plans had a combined membership of 170,943 as of December 31, 2004, compared to 169,239 as of
December 31, 2003.
Medicaid Products
As of December 31, 2004, we had an aggregate of 831,421 Medicaid members compared to 845,526 members as of December
31, 2003, principally in California. Of our 831,421 Medicaid members as of December 31, 2004, 476,355 reside in Los Angeles
County, California. We also had Medicaid members and operations in Connecticut and New Jersey. See “Management’s Discussion
and Analysis of Financial Condition and Results of Operations—Enrollment Information” for detailed information regarding our
Medicaid enrollment by state. To enroll in our Medicaid products, an individual must be eligible for Medicaid benefits under the
appropriate state regulatory requirements. Our Medicaid HMO products include, in addition to standard Medicaid coverage, certain
additional services including dental and vision benefits. The applicable state agency pays our HMOs a monthly fee for the coverage
of our Medicaid members.
Our California HMO, HN California, participates in the State Children’s Health Insurance Program (“SCHIP”), which, in
California, is known as the Healthy Families program. As of December 31, 2004, there were 93,288 members in our Healthy Families
program. SCHIP was designed as a federal/state partnership, similar to Medicaid, with the goal of expanding health insurance to
children whose families earn too much money to be eligible for Medicaid, but not enough money to purchase private insurance.
Member premiums, which range from $4 to $9 per child, per month, are subsidized by the State of California. California receives
two-thirds of the funding for the program from the federal government.
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