Health Net 2013 Annual Report Download - page 80

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78
Medical Care Ratios
The health plan services MCR in our Western Region Operations segment was 85.6 percent for the year ended
December 31, 2013 compared with 89.1 percent for the year ended December 31, 2012.
Commercial MCR in our Western Region Operations segment was 85.6 percent for the year ended December 31,
2013 compared with 88.8 percent for the year ended December 31, 2012. The improvement of 320 basis points in
commercial MCR for the year ended December 31, 2013 compared to the same period in 2012 is primarily due to the
repositioning of our large group commercial business, lower utilization and changes in product and geographic mix as
well as the absence of the adverse prior period development that was recorded in 2012.
The Medicare Advantage MCR in in our Western Region Operations segment was 90.6 percent for the year ended
December 31, 2013 compared with 89.3 percent for the year ended December 31, 2012. The Medicare Advantage MCR
deteriorated by 130 basis points for the year ended December 31, 2013 compared to the same period in 2012 primarily
due to lower premium yield from lower federal rates.
The Medicaid MCR was 80.4 percent for the year ended December 31, 2013 compared with 89.4 percent for the
year ended December 31, 2012. The improvement in the Medicaid MCR for the year ended December 31, 2013
compared to the same period in 2012 was primarily due to favorable California Medicaid rate adjustments primarily
related to prior periods, the impact of the reinstated Medicaid premium taxes that increased our Medicaid premium
revenues, and retrospective adjustments to premium revenues related to our state-sponsored health plans rate settlement
agreement. For additional information on the Medicaid rate adjustments, the reinstated Medicaid premium taxes and
state-sponsored health plans rate settlement agreement, see Note 2 to our consolidated financial statements.
G&A, Selling and Interest Expenses
G&A expense in our Western Region Operations segment was $1.1 billion for the year ended December 31, 2013
compared with $903.1 million for the year ended December 31, 2012. The G&A expense ratio was 10.3 percent for the
year ended December 31, 2013 compared with 8.6 percent for the year ended December 31, 2012.
Increases in our general and administrative expenses for the year ended December 31, 2013 are primarily due to
increases in insurance, taxes and related fees, including reinstated Medicaid premium taxes of $92.8 million. See Note 2
to our consolidated financial statements for additional information regarding these premium taxes. Such increases in
insurance, taxes and related fees impacted the G&A expense ratio by 140 basis points for the year ended December 31,
2013. In addition, increases in our general and administrative expenses for the year ended December 31, 2013 are
impacted by costs related to the implementation of the CCI, including the dual eligibles demonstration, and the ACA,
including the exchanges. We expect to continue to incur additional expenses in 2014 in connection with our
implementation of the CCI, including the dual eligibles demonstration, the ACA, and new business initiatives, among
other things.
Selling expense in our Western Region Operations segment was $239.4 million for the year ended December 31,
2013 compared with $245.9 million for the year ended December 31, 2012. The selling costs ratio was 2.3 percent for
the year ended December 31, 2013 compared with 2.4 percent for the year ended December 31, 2012.
Interest expense in our Western Region Operations segment was $32.6 million for the year ended December 31,
2013 compared with $33.2 million for the year ended December 31, 2012.
Year Ended December 31, 2012 compared to Year Ended December 31, 2011
Revenues
Total revenues in our Western Region Operations segment in the year ended December 31, 2012 increased 6.0
percent to $10.6 billion compared to the same period in 2011 primarily due to increases in premiums revenue. Health
plan services premiums revenues in our Western Region Operations segment increased 5.9 percent to $10.5 billion for
the year ended December 31, 2012 compared to the same period in 2011 primarily due to increases in our Medi-Cal and
Medicare Advantage enrollment.
Investment income in our Western Region Operations segment increased to $82.4 million for the year ended
December 31, 2012 up from $74.1 million for the same period in 2011 due to higher available-for-sale investments
balances and an increase in realized gains.