Investments Buoy Oregon Health Insurer Profits

Will gains transfer to lower premiums? Not yet anyway
The Lund Report

December 10, 2009 -- Oregon insurers continued reaping the rewards of a positive stock market through much of this year, based on the latest available financial statements filed with the state.

 
Net investment gains accounted for 70 percent of the $84.2 million in net income earned this year by Oregon’s eight largest domiciled insurers as of September 30, 2009. That's a substantial up-tick from gains as of last quarter of $49.5 million. 
 
At this rate, the state’s largely non-profit gang of health insurers will increase profits this year by 46 percent compared to $76.4 million for all of 2008. Gains in large part came from Kaiser, Regence, Providence and PacifiCare. Health Net and Lifewise were in the read.
 
There’s no indication, however, for those making money that increased investment gains have translated to reduced premiums, at least not yet anyway. Just the opposite has been true as insurers continued posting double-digit rate increases this year even as investment gains were coming in strong.
 
As for administrative expenses, insurers spent $364 million, a large share of which went to marketing and salaries.
 
The number of people covered by commercial health plans remained relatively stable through much of the year. Oregon insurers ended September with a little more than 1.8 million members, including Medicare Advantage plans, down from nearly 2 million at the end of 2008 and 2.3 million in 2007.
 
Roughly 500,000 Oregonians were covered by health insurers -- including Medicare Advantage plans -- headquartered outside the state, which Oregon officials have little authority to regulate. Around 50,000 people were covered by the Oregon Health Plan.
 
Another 15,000 individuals were insured by guaranteed plans through the Oregon Medical Insurance Pool. The so-called high-risk pool is subsidized through a bi-annual assessment on all health insurance companies that topped $90 million this year. Insurers are instructed to count this assessment as an administrative expense.

Meanwhile, insurers rejected another 5,000 Oregonians for individual health insurance in the third quarter of this year, based on enrollment reports at the Oregon Insurance Division. They accepted 16,000 people for individual health plans over the same period amounting to a 24 percent rejection rate.  

Click on the below chart to see in greater detail.

For related stories see articles at The Lund Report on second quarter 2009, first quarter 2009 and end of year 2008.

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