Health Net 2009 Annual Report Download - page 62

Health Plan Services Results
The following table summarizes the operating results for the health plan services for the last three fiscal
years:
Year Ended December 31,
2009 2008 2007
(Dollars in millions, except PMPM data)
Health plan services:
Commercial premium revenue ......................... $ 7,562.4 $ 7,797.5 $ 7,468.0
Medicare premium revenue ........................... 3,672.9 3,521.5 2,778.9
Medicaid premium revenue ........................... 1,205.3 1,073.0 1,188.4
Health plan services premium revenues .................. $12,440.6 $ 12,392.0 $11,435.3
Health plan services costs ............................. (10,731.9) (10,762.7) (9,762.9)
Net investment income ............................... 105.9 91.0 120.2
Administrative services fees and other income ............ 62.0 48.3 51.1
G&A ............................................. (1,362.0) (1,291.0) (1,275.6)
Selling ............................................ (330.1) (360.4) (327.8)
Depreciation and amortization ......................... (53.0) (59.9) (43.0)
Interest ........................................... (40.9) (42.9) (32.5)
Pretax income ...................................... $ 90.6 $ 14.4 $ 164.8
MCR: ............................................ 86.3% 86.9% 85.4%
Commercial ................................... 86.1% 85.9% 85.7%
Medicare ...................................... 86.3% 89.9% 85.4%
Medicaid ...................................... 87.1% 83.7% 83.1%
Health plan services premium PMPM ................... $ 294.25 $ 277.79 $ 263.54
Health plan services costs PMPM ...................... $ 253.84 $ 241.27 $ 225.00
G&A expense ratio .................................. 10.9% 10.4% 11.1%
Selling costs ratio ................................... 2.7% 2.9% 2.9%
Due to the Northeast Sale on December 11, 2009, the health plan services results above include the financial
results of the Acquired Companies only for the period ended December 11, 2009. Starting in the first quarter of
2010, the administrative services fees earned and expenses incurred under the United Administrative Services
Agreements are expected to be significant.
Health Plan Services Premiums
Total health plan services premiums increased by $48.6 million, or less than 1%, for the year ended
December 31, 2009 as compared to the same period in 2008, and increased by $956.7 million, or 8%, for the year
ended December 31, 2008 as compared to the same period in 2007. On a PMPM basis, premium yields increased
by 6% for the year ended December 31, 2009 as compared to the same period in 2008, and increased by 5% for
the year ended December 31, 2008 as compared to the same period in 2007.
Year Ended December 31, 2009 Compared to Year Ended December 31, 2008
Commercial premium revenues decreased by $235.1 million, or 3%, for the year ended December 31, 2009
as compared to the same period in 2008. These decreases were primarily attributable to a decline in our
commercial risk membership primarily driven by higher unemployment as a result of economic pressures and the
Northeast Sale. The commercial premium PMPM increased by 7.6% for the year ended December 31, 2009 as
compared to the same period in 2008.
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