HMO SLIDE
Health Plan Operators Posted Another Year of Membership Declines
By VITA REED
Orange County’s health maintenance organizations are showing signs of the mature market here.
The 10 HMOs on the Business Journal’s annual list reported a 3% decline in membership from the previous year.
The drop comes after a slide of 2% on last year’s list.
Like other parts of California, OC is considered a mature HMO market.
There were huge gains when HMOs took off in the 1980s and 1990s, but enrollment gains have slowed since as competitive plans emerged.
Plans on this year’s list counted a total enrollment of 1.3 million, compared to a county population of slightly more than 3 million.
A caveat: This year’s list includes
a Business Journal estimate for No. 7 Universal Care of California in Signal Hill, which declined to disclose OC enrollment.
Minus the estimate, the remaining nine HMOs in OC still posted a 3% decline in membership.
Most figures were as of June 30, though some reported numbers for the end of the first quarter.
Despite surging healthcare costs in recent years, HMOs haven’t been seen as the sole solution to controlling employer insurance costs.
There’s been a modest move into what’s called “consumer-driven” healthcare, along with other options such as preferred provider organizations.
Consumer-driven plans give patients a healthcare account. Money left over at the end of the year is available for the next one. Some say the plans cut healthcare spending because patients have a direct stake in deciding how to spend their healthcare money.
No. 1 Kaiser Permanente continued its reign as the county’s largest HMO, with 341,741 members. It lost about 1% of its membership during the past 12 months.
The economy contributed to the small membership decline, according to Julie Miller-Phipps, the HMO’s senior vice president and local service area manager.
“Probably the main reason was the grocery store workers’ strike,” she said. “A lot of folks lost their coverage,we had tens of thousands (of grocery workers).”
Kaiser is counting on new plans, including a lower-cost HMO offering with a deductible, to help fuel membership growth, Miller-Phipps said. The deductible HMO is designed to lure the “younger, healthier kind of folks” who don’t use a lot of healthcare services, she said.
“Our traditional plan does cost. It’s fully loaded,” Miller-Phipps said.
Besides the new plan, Kaiser is gearing up to open a medical office building and patient facility on Sand Canyon in Irvine, off the San Diego (I-405) Freeway.
No. 2 Blue Cross of California said its OC enrollment fell 8% to 263,070.
No. 3 PacifiCare of California, a unit of Cypress-based PacifiCare Health Systems Inc., rounded out the top trio of HMOs. PacifiCare said its membership rose 7% to 160,000 in OC.
PacifiCare, which has had an up-and-down ride on Wall Street this year, said it was seeing profitable commercial membership growth in the first quarter.
No. 4 Woodland Hills-based Health Net of California, which has a local office in Costa Mesa, reported a 12% jump in OC HMO enrollment to 147,000.
Kaiser Permanente and Health Net have put their rivalry aside to launch a joint health plan in California.
The plan, called Risk Adjustment, is aimed at businesses with 100 or more workers.
No. 5 Blue Shield of California reported a 4% enrollment slide to 143,616 OC members.
And No. 6 Cigna Healthcare of California, which has an OC office in Santa Ana, said its OC membership slid 22% to 73,146.
A combination of higher unemployment, sluggish job growth, increased competition and “strengthened underwriting” led to Cigna’s membership decline here, said spokeswoman Gwyn Dilday.
Cigna’s banking on a couple of new plan launches to build membership: Cignature-Your Plan, its entry into the consumer-driven healthcare market, plus a new health savings account.
No. 8 Aetna Health of California reported 43,250 members in OC, down 20% from the previous year.
No. 9 Scan Health Plan, a Long Beach-based HMO that mainly serves Medicare patients, posted an enrollment gain of 6% to 12,904.
There was one newcomer,No. 10 Great-West Healthcare, previously known as One Health Plan of California. Great-West had 10,500 members in OC for
both its HMO and PPO plans.
PPO Directory
Blue Cross of California repeated as Orange County’s largest preferred provider organization with a 9% gain to 333,959 enrollees, according to this week’s Business Journal directory.
But, as was the case in previous years, many of the companies listed on the directory declined to carve out specific OC enrollment figures.
Health analysts have said that PPOs, which traditionally offer more flexibility in selecting doctors but at a higher cost, have gained popularity at the expense of health maintenance organizations. But the ebbing and flowing of the economy, along with the emergence of consumer-driven healthcare, may have slowed growth in PPOs.
PPOs were particularly popular a few years ago, when competition to hire employees was fierce, and more employers used benefit packages as incentives to hire workers.
Of those that provided OC membership, Blue Shield of California reported 104,124 members, up 3% from the 2003 directory.
Irvine-based Private Healthcare Systems Inc. reported 172,000 members, down 6% from the previous year. Private Healthcare’s numbers include Los Angeles-area membership, as the company doesn’t break down its OC enrollees.
Other PPOs in the directory that reported local membership includes: Aetna Health of California, with an office in Santa Ana and 82,763 members; Cigna Healthcare, also in Santa Ana, with 33,548 members; and CorVel Corp. in Irvine, with 9,500 members.
Meanwhile, Beech Street Corp., which is based in Lake Forest, wouldn’t break out OC numbers. Beech Street said it had 16 million U.S. members, the same as previous years.
