Health Net 2015 Annual Report Download - page 81

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insurer fee and premium taxes. See Note 2 to our consolidated financial statements, under the heading "Accounting for
Certain Provisions of the ACA" for more information regarding ACA-related fees. The total G&A expense ratio was
10.9 percent for the year ended December 31, 2015 compared with 10.9 percent for the year ended December 31, 2014.
Selling expense in our Western Region Operations segment was $270.2 million for the year ended December 31,
2015 compared with $262.3 million for the year ended December 31, 2014. The selling costs ratio was 1.7 percent for
the year ended December 31, 2015 compared with 2.0 percent for the year ended December 31, 2014.
Interest expense in our Western Region Operations segment increased to $33.3 million for the year ended
December 31, 2015 from $31.4 million for the year ended December 31, 2014 primarily due to higher outstanding
revolving credit facility balances.
Year Ended December 31, 2014 Compared to Year Ended December 31, 2013
Revenues
Total revenues in our Western Region Operations segment for the year ended December 31, 2014 increased 27.9
percent to $13.4 billion compared to the same period in 2013 primarily due to an increase in our premium revenues in
our health plans. Health plan services premiums revenues in our Western Region Operations segment increased to $13.4
billion for the year ended December 31, 2014 compared to $10.4 billion in the same period in 2013, primarily due to an
increase in our Medicaid premium revenues.
As of December 31, 2014, we accrued $200.6 million for an MLR rebate payable to DHCS in connection with
Medicaid adult expansion members and accrued $24.7 million, net of $2.3 million receivable, for excess profit sharing
payable to the state of Arizona under our Arizona Medicaid contract. Accordingly, Medicaid premium revenue was
reduced by $225.3 million for the year ended December 31, 2014 related to MLR rebates.
Investment income in our Western Region Operations segment decreased to $45.2 million for the year ended
December 31, 2014 from $69.6 million for the same period in 2013 due to lower investment gains realized during the
year ended December 31, 2014.
Administrative services fees and other income decreased by $36.5 million for the year ended December 31, 2014
as compared to the year ended December 31, 2013, primarily due to a settlement related to a pharmacy contract in 2013
and the change in the reimbursement methodology of Section 1202 of the ACA in 2014.
Health Plan Services Expenses
Health plan services expenses in our Western Region Operations segment increased 27.2 percent to
approximately $11.3 billion for the year ended December 31, 2014 from approximately $8.9 billion for the year ended
December 31, 2013, primarily due to new membership resulting from Medicaid expansion under the ACA, partially
offset by $234.0 million of reinsurance recoverable included in commercial health plan services costs for the year ended
December 31, 2014, as discussed in Note 2 to our consolidated financial statements under the heading "Accounting for
Certain Provisions of the ACA."
Premium Yield and Health Care Cost Trends
Our Western Region Operations premium PMPM increased by 9.8 percent to $384 for the year ended December
31, 2014 compared to an increase of 2.5 percent to $350 for the same period in 2013.
Western Region Operations health care cost PMPM increased by 8.5 percent to $325 for the year ended
December 31, 2014 compared to a decrease of 1.4 percent to $300 for the same period in 2013.
Medical Care Ratios
The Western Region Operations health plan services MCR was 84.6 percent for the year ended December 31,
2014 compared with 85.6 percent for the year ended December 31, 2013.
General and Administrative, Selling and Interest Expenses
Total general and administrative expense in our Western Region Operations segment was $1.5 billion for the year
ended December 31, 2014 compared with $1.1 billion for the year ended December 31, 2013. The total G&A expense
ratio was 10.9 percent for the year ended December 31, 2014 compared with 10.3 percent for the year ended
December 31, 2013. The increase in our total general and administrative expenses for the year ended December 31,