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Commercial Health Insurers In Oregon Enjoy Banner Year

March 3, 2020

After hefty payments for sick enrollees pushed several of Oregon’s largest commercial insurers to large financial losses in 2018, last year marked a significant rebound for the industry. 

Four of the state’s five largest insurers posted multimillion-dollar profit gains in 2019, according to financial reports collected by the National Association of Insurance Commissioners.

Two of the large commercial insurers, Kaiser Foundation Health Plan of the Northwest and Moda Health Plan, enjoyed especially large turnarounds. 

Kaiser reported $113 million in profits last year, the largest among Oregon insurers by a wide margin and a far rosier outcome than the $7 million in net losses it posted in 2018. 

Perhaps more noteworthy was Moda’s $39 million profit last year. The gains came a year after the Portland-based insurer posted a staggering $227 million net loss, as it fought state regulators to keep operating. Moda survived largely on a $152 million cash injection from Delta Dental of California, which acquired a 49.5% ownership stake in Moda from the deal. 

The insurers took different paths to return to profitability. Kaiser, the largest Oregon commercial insurer by enrollment, recorded more than $80 million in underwriting profits – the difference between revenue earned from premiums and expenses from claims and other sources – in 2019. The strong performance came after posting a nearly $16 million loss in 2018. 

Moda recorded a net underwriting loss of nearly $10 million. But that performance was much improved from its $249 million underwriting loss in 2018, as the company fought to stay solvent. Yet the capital injection has appeared to benefit the struggling insurer. Enrollment in Moda commercial plans rose by more than 7% in 2019, according to its financial filings.

Insurers like Moda and Kaiser blamed their 2018 losses on the suspension of an Affordable Care Act subsidy for insurers who enrolled sicker patients than a typical population pool. Under the ACA, the Centers for Medicare & Medicaid Services provided “risk adjustment” payments to insurers, collecting money from insurers with healthier patient pools and redistributing them to insurers with sicker patients to help them shoulder the higher costs of care. 

But congressional Republicans began chipping away at the payments in 2014 as part of their years-long effort to dismantle the Affordable Care Act, and many insurers have paid the price. Kaiser was left on the hook for $66 million in risk adjustment payments in 2018, 80% more than in 2017. 

But insurers like Kaiser, Moda and PacificSource Health Plans appear to have weathered the worst from that ACA fight – though other challenges could loom in the form of court challenges to various mandates under the law. 

Profits at Springfield-based PacificSource came in just shy of $25 million last year, up from about $14 million in 2018. The insurer recorded a $16 million underwriting loss, but largely due to increased administrative and claims adjustment expenses, according to its filings. PacificSource’s revenue was up 15% over the year, and commercial enrollment rose by nearly 9%, the largest gain among all insurers operating in Oregon. 

Beaverton-based Providence more than doubled its profits last year, largely on the strength of higher service revenue and lower administrative costs. Underwriting gains rose from $31 million to $60 million, boosting net profits from $39 million to more than $81 million. 

Regence BlueCross BlueShield was the lone large commercial insurer to post lower profits in 2019 than the year before. But Regence only just missed its 2018 performance, recording $60.6 million in profits last year after taking in $62 million the year before. 

More than any other insurer, Regence has dealt with declining commercial enrollment over the last year. Roughly 420,000 Oregonians were enrolled in Regence plans at the end of 2019, down from 530,000 in 2018. 

Providence was the only other large insurer to lose members over the year. Commercial membership fell from 241,000 to 206,000. 

While Regence and Providence lost enrollees, other insurers gained thousands of new plan holders. PacificSource's enrollment rose by more than 20,000 members in 2019, Kaiser's enrollment rose by 10,000 and Moda's rose by about 6,500. 

While large insurers enjoyed a profitable year, two much smaller commercial insurers, BridgeSpan Health Co., owned by Cambia Health Solutions – which also owns Regence – and Health Net Health Plan of Oregon, owned by Centene Corp., struggled. Profits at BridgeSpan fell from $9.1 million in 2018 to less than $1 million last year. Enrollment in BridgeSpan plans was flat, while Health Net enrolment fell by about 6,000. 

You can reach Elon Glucklich at [email protected].