rss icon

Sunday, 23 March 2014 20:31

Strong performance positions Priority Health to deal with health care reform, CFO says

Written by 
Rate this item
(1 Vote)

Priority Health recorded strong earnings for 2013 with a small increase in income from underwriting policies and slight declines in revenue and investment income.

The Grand Rapids-based health plan recorded net income of $58.6 million for 2013 on total revenue of $1.87 billion, according to an annual financial report filed with state regulators. Priority also generated a $48.2 million underwriting gain and $7.3 million in net investment income.

That compares with net income of $60.6 million in 2012 on total revenue of $1.93 billion, a $47.2 million underwriting gain and $9.4 million in net investment income.

The bottom line equates to about a 2.3-percent margin, which slightly exceeds the 2 percent that Priority Health typically targets and “put us in a very strong position heading into 2014 with all of the changes with health care reform,” said Mary Ann Jones, the insurer’s chief financial officer.

“We are really proud of our performance in 2013,” Jones said. “We had a very strong year.”

The report filed with the Michigan Department of Financial and Insurance Services covers Priority Health’s HMO, point-of-service and Medicare Advantage plans, which account for nearly two-thirds of the health plan’s overall book of business.

In a separate filing, Priority Health reported a slight loss on its Medicaid HMO business. Priority Health Choice Inc.’s net loss of $100,874 came on total revenues of $231.4 million, a $634,288 underwriting loss and net investment income of $533,414, according to an annual financial statement.

That compares with net income of $4.0 million for the Medicaid HMO business in 2012 on total revenue of $192.6 million, a $3.9 million net underwriting gain and net investment income of $114,858.

Priority Health’s Medicaid enrollment grew to 75,136 at the end of 2013 from 70,087 at the start of the year, and the health plan expects strong growth in 2014 as Medicaid eligibility expands as of April 1, Jones said.

Enrollment across all of Priority Health’s products – group, individual, Medicare and Medicaid – now stands at about 575,000 members. Enrollment for the HMO, POS and Medicare Advantage plan was 362,130 as of Dec. 31, down from more than 398,000 a year earlier. Some of the decline stems from the continued migration of employers from HMO to PPO group policies, Jones said.

Priority Health is seeing greater interest from employers in transitioning to a self-funded group health plan, Jones said. That interest comes from wanting to avoid the coverage mandates and taxes imposed by the federal Affordable Care Act that do not apply to self-funded plans.

“Where we’ve seen more of our commercial growth has been in the self-funded space because of some of the regulatory requirements of health care reform,” Jones said.

That interest could wane after the Obama administration ruled last fall that employers could retain their existing health plans for another year, even if they did not comply with the ACA’s coverage mandates, Jones said.

The federal government in March then decided that employers could keep their prior health plan for a couple of more years, Jones said. State regulators would have to agree to the extension of non-compliant plans.

“We’re hopeful that the state will go along with that,” Jones said. “So I think we’re going to see that interest in retaining existing plans to be place.”

Read 3617 times Last modified on Saturday, 22 March 2014 23:39

Breaking News

July 2018
S M T W T F S
1 2 3 4 5 6 7
8 9 10 11 12 13 14
15 16 17 18 19 20 21
22 23 24 25 26 27 28
29 30 31 1 2 3 4

Follow MiBiz