After years of growth, Orange County’s health maintenance organizations saw a slight membership decline during the past year.
The eight HMOs on this year’s Business Journal list reported a 2.4% drop to 1.19 million people, compared with 1.21 million people a year ago.
The decline was largely driven by UnitedHealthcare/PacifiCare, which saw its enrollment drop by 52,000 people, or 22.4%.
The list is ranked by enrollment, with figures compiled from the California Department of Managed Care and the companies themselves.
HMOs saw huge membership gains back in the 1980s and 1990s, as businesses were seeking ways to deal with double-digit healthcare cost hikes.
The enrollment pace has slowed as new forms of health plans have emerged, such as health savings accounts or plans with high deductibles but more freedom to choose doctors.
HMOs try to control healthcare costs by encouraging regular checkups, steering patients to primary care doctors and monitoring the use of more expensive specialists.
In the late 1990s, a backlash against HMOs by patients, doctors and politicians also hurt enrollment, although such sentiments have eased, according to industry insiders.
Oakland-based Kaiser Permanente kept its No. 1 spot this year. It had 382,677 enrollees in the county, a nearly 3% jump from a year earlier,the biggest enrollee increase on the list by number of new patients.
Kaiser’s OC enrollment has more than doubled since the early 1990s.
“We’ve worked very hard to build up the reputation of the organization in the county,” Julie Miller-Phipps, Kaiser’s vice president and OC area service manager, said earlier this year.
Kaiser recently opened a hospital on Sand Canyon Avenue in Irvine, the centerpiece of a $400 million South County complex. The company said it opened the hospital to meet South Orange County demand. It hopes to begin working on an Anaheim hospital soon.
Anthem Blue Cross of California, a unit of Indianapolis-based WellPoint Inc., came in at No. 2 on the list, also the same spot as last year. It saw its local enrollment grow 2% to 240,950 people.
UnitedHealthcare/PacifiCare, part of Minnetonka, Minn.-based UnitedHealth Group Inc., was the biggest decliner on the list by percentage and number of enrollees. Despite the big drop, the company kept its No. 3 spot.
UnitedHealth Group said it anticipates losing 800,000 members this year.
The company has decided to hold the line on the premiums it charges its customers rather than cutting them in a move that’s sometimes called “buying business” (see related story on page 32).
San Francisco-based Blue Shield of California was the only other decliner on the list. It saw its OC enrollment drop 6% to 108,954 members, but kept its No. 5 position.
No. 4 Health Net Life Insurance Co., part of Woodland Hills-based Health Net Inc., saw its OC membership increase 5% to 148,000. Last year, Health Net saw its membership surge 53%.
A spokesman for the company said last year that the plan grew because of stable pricing, “creative broker outreach” and growth in its Healthy Families plan, which covers children whose parents do not qualify for traditional Medi-Cal publicly subsidized insurance.
No HMO posted double-digit enrollment gains.
The largest percentage jump in enrollment came from No. 6 Aetna Health of California, part of Hartford, Conn.-based Aetna Inc. Aetna’s local HMO membership rose 9% to 52,840 members.
Aetna switched places with No. 7 Cigna Healthcare, which posted a 4% enrollment rise to 52,801 OC members.
No. 8 Scan Health Plan, a Long Beach-based HMO that primarily serves Medicare beneficiaries, had 18,283 local members, a 6% growth from last year’s 17,251.
Great-West Healthcare, which was No. 9 on last year’s list, doesn’t appear this year because Cigna bought it in April.
PPO Directory
The five companies that reported OC enrollment figures for the Business Journal’s preferred-provider organization directory posted a 2.6% gain in enrollment over the past year.
The five remaining companies on the directory did not break out OC figures.
PPOs allow patients more leeway in their healthcare decisions, albeit at higher costs than HMOs.
PPOs gained some popularity at the expense of HMOs in the past decade, particularly during the late 1990s when competition to hire workers was more cutthroat and employers were more likely to use benefit packages as hiring incentives.
Three PPOs on the directory had double-digit percentage hikes in membership.
Health Net Life Insurance local PPO was the biggest percentage gainer. It was up 17% to 27,000 members, although this enrollment makes it the smallest PPO on the directory.
Aetna Health of California saw the second biggest percentage gain, increasing its members by 14% to 131,700.
UnitedHealthcare/PacifiCare saw the third largest percentage gain, upping its membership by 13% to 35,000, making it one of the smaller PPOs on the directory. This gain is in contrast to its local HMO membership, which declined 22.4%.
Farmington, Conn.-based Interplan Health Group is the largest PPO by membership on the directory. The Business Journal estimates that it has 600,000 local members.
Anthem Blue Cross’ local PPO, part of WellPoint, posted a 1% gain to 270,975 members, making it the second largest company on the list by enrollment.
Beech Street Corp., which was bought by Viant Holdings Inc. of Naperville, Ill., last year, has an estimated 160,000 local members. Beech Street is considered one of the seminal figures in the PPO movement.
Private Healthcare Services, part of Waltham, Mass.-based Private Healthcare Systems Inc., had an estimated 135,000 local members.
Blue Shield of California’s local membership grew 3% to 120,738, partly making up for its 6% drop in HMO membership.
No PPO that reported numbers posted a membership decline.
Some analysts believe economic fluctuations and a bit of relaxation among HMOs in allowing access to specialist doctors could limit PPOs’ appeal.
