Losses Continue to Mount at Most Oregon Health Insurers

Six-month financial reports show improvements, with Kaiser, Regence and Providence now profitable, while Zoom Health Plan improved its cash position. But, during the first half of 2016, most insurers still posted losses.

These continue to be lean times for most of Oregon’s health insurance companies, with more than half reporting net financial losses in the first half of 2016. Two have shut down operations over the past year – Health Republic and Oregon’s Health CO-OP. A third, Moda, still operates in Oregon, but under careful oversight by state regulators. Yet several insurers showed signs that the worst may be behind them in reports filed this week with regulators and obtained by The Lund Report.

Kaiser Permanente reported strong profits of $40.9 million for the first six months of 2016, after posting a net loss of $13.2 million during the same period last year, which its executives attribute to a focus on affordability and quality of care. Likewise, Regence BlueCross BlueShield of Oregon and Providence Health Plans reported profitable first halves of 2016, after posting net losses in the same period of 2015. And several insurers that reported net losses were at least able to improve their cash situations: Health Net Health Plan, LifeWise and Zoom. Even Moda, under regulatory oversight and reporting a negative cash balance, showed signs that it is digging out of its hole.

Although financial statements were due to regulators by August 15, as of 9:30 a.m. Aug. 16, Oregon’s Health CO-OP’s quarterly report had not yet been received. The CO-OP ceased operation at the end of July. Health Republic, another plan that shut down, has continued to file quarterly statements as it has wrapped up its operations, and its latest snapshot is presented below.

Here’s how other major insurers in the state fared over the first half of 2016.

Kaiser Permanente

  • First half of 2016 net income: $40,915,023, compared to a first half of 2015 net loss: $13,159,352.
  • Cash and equivalents on June 30, 2016: $6,395,730, down from $26,836,839, on June 30, 2015.
  • Total members on June 30: 489,026, up from 475,594 at the start of the year.

After filing its quarterly financial report with regulators, Kaiser submitted a statement summarizing its results to The Lund Report. The statement, attributed to Karen Schartman, Kaiser’s regional vice president and CFO, said:

“In filings with the Oregon Division of Financial Regulation, Kaiser Foundation Health Plan of the Northwest (HP) reported 2016 YTD net income of $40.9 million on $1.8 billion of revenue. These results were greatly improved when compared to the 2015 second quarter net loss of ($13.2) million.

“HP was able to improve its bottom line, in spite of Affordable Care Act (ACA) taxes, by remaining focused on affordability and quality of care. The finalization of 2015 ACA risk adjustment and risk corridor results that were announced in June were similar to prior year in aggregate, and therefore had very little impact to the change in earnings when comparing Q2 2016 to Q2 2015. The real story is HP continuing its focus on affordability in 2016, which contributed to the gain of 13,400 new members. Kaiser’s preventative care efforts also contributed to this quarter’s results by increasing primary care visits, with a decrease in more costly emergency room visits. Throughout the remainder of the year, HP will enhance its focus on virtual care visits and finding other efficient ways to deliver quality care to its members.”

Regence BlueCross BlueShield of Oregon

  • First half of 2016 net income: $3,047,356, compared to a first half of 2015 net loss: $4,264,089.
  • Cash and equivalents on June 30, 2016: $6,545,020, down from $44,658,832 on June 30, 2015.
  • Total members on June 30: 476,883, down from 486,267 at the start of the year.

Regence BlueCross BlueShield of Oregon’s member enrollment has fluctuated up and down between roughly 450,000 and 505,000 since The Lund Report began tracking these figures in 2011. Because much of the insurer’s business is in employer-owned plans that it administers, many more Oregonians have Regence coverage without being counted on its rolls.

Financially, Regence has outperformed most of its peers in the state so far this year, with a net profit of $3 million in the first half of 2016, at a time when most are posting losses. Revenue was down at Regence, but so were hospital and medical costs compared to the first half of last year, and the insurer reported spending fewer dollars on administration as well.

PacificSource Health Plans

  • First half of 2016 net loss: $9,446,007, compared to a first half of 2015 net loss: $6,274,870.
  • Cash and equivalents on June 30, 2016: $10,370,068, down from $25,227,145, on June 30, 2015.
  • Total members on June 30: 160,241, down from 168,480 at the start of the year.

PacificSource’s enrollment peaked in 2012 at 224,487 members. Since then, enrollment has been on a steady decline, and as of June 30 of this year it was some 64,000 below that peak. Some of that decline may reflect a shift from traditional health insurance to employer-owned insurance that PacificSource administers, which would not be reflected on the company’s statements.

Like most insurers in Oregon, PacificSource reported continuing losses for the first half of 2016. It still has $10.4 million in cash reserves for now, but continued financial losses could pose challenges in the future.

Providence Health Plan

  • First half of 2016 net income: $3,572,971, compared to a first half of 2015 net loss: $12,392,514.
  • Cash and equivalents on June 30, 2016: $100,128,941, up from $65,003,001, on June 30, 2015.
  • Total members on June 30: 261,640, up from 218,421 at the start of the year.

At a time when many of Oregon’s largest health insurers are reporting financial losses and seeing membership rolls decline, Providence is bucking the trend. Its enrollment has been steadily climbing for years, and after reporting a net loss for the first half of 2015, it was profitable to the tune of $3.6 million in the first half of this year.

With more than $100.1 million in cash and equivalents as of June 30, Providence has the most cash on hand of any major insurer in the state.

Health Net Health Plan of Oregon Inc.

  • First half of 2016 net loss: $29,059,416, compared to a first half of 2015 net loss: $7,033,583.
  • Cash and equivalents on June 30, 2016: $30,627,879, up from $12,877,616, on June 30, 2015.
  • Total members on June 30: 90,776, up from 80,293 at the start of the year.

Health Net Health Plan of Oregon reported a mixed bag for the first half of the year: while its losses were steeper than during the same period of 2015, it also managed to bolster its cash position and to add more than 10,000 new members.

Though some of Health Net’s growth has come in the form of traditional comprehensive health insurance, with about 3,000 people enrolled through group plans since the start of the year, government programs also make up a significant chunk of the difference. As of June 30, Health Net had 32,769 people enrolled in its Medicare plans, up by about 7,000 since the start of the year.

Moda Health Plan

  • First half of 2016 net loss: $33,029,881, compared to a first half of 2015 net loss: $33,781,961.
  • Cash and equivalents on June 30, 2016: negative $3,829,938, up from negative $45,897,024, on June 30, 2015.
  • Total members on June 30: 134,146, down from 216,267 at the start of the year.

Since surviving a cash crisis that nearly shut it down, Moda Health Plan has been bleeding members. In October, the insurance company that paid millions of dollars to put its name on the arena where the Portland Trailblazers play basketball, announced it would pull out of Washington and California’s markets. In January, Oregon regulators put tight controls on the company’s operations.

Moda had grown quickly before then: from just 86,289 members at the end of 2013, its individual health plans – among the cheapest on the state’s insurance exchange – helped enrollment surge to a peak of 221,176 in the middle of 2015. Membership has dropped every quarter since reaching that peak, and was down to 134,146 as of June 30 this year.

Though Moda reported a loss of $33 million during the first half of this year, about the same as it saw last year, it has gradually been digging itself out of its hole. Its cash balance is still negative, but it has climbed from negative $45.9 million a year ago to negative $3.8 million as of June 30. If that trend continues, the company should be back into positive cash territory by the end of the year.

LifeWise Health Plan of Oregon Inc.

  • First half of 2016 net loss: $6,166,971, compared to a first half of 2015 net loss: $18,389,683.
  • Cash and equivalents on June 30, 2016: $7,643,200, up from $6,669,512, on June 30, 2015.
  • Total members on June 30: 37,893, down from 66,007 at the start of the year.

Like most insurers in Oregon, LifeWise Health Plan reported a net loss for the first half of 2016. But its $6.2 million loss represents an improvement over the same period in 2015, when its net loss was $18.4 million.

A one-year surge in membership at LifeWise seems to have ended. From 2011 through 2014, the company consistently had between 45,000 and 55,000 members. Then, in 2015 it reported a big jump, to 74,909 members in the first quarter, which gradually dropped to 66,007 at the end of last year. In the first quarter of 2016, that dropped significantly, to 39,997. Enrollment dropped still further, to 37,893, as of June 30 of this year. Some of that decline may reflect a shift from traditional health insurance to employer-owned insurance that LifeWise administers, which would not be reflected on the company’s statements.

Health Republic

  • First half of 2016 net loss: $669,088, compared to a first half of 2015 net loss: $5,768,748.
  • Cash and equivalents on June 30, 2016: $1,970,382, down from $12,953,435, on June 30, 2015.
  • Total members on June 30: 0, down from 11,660 at the end of last year.

Health Republic, created under provisions of the Affordable Care Act, was fatally injured when cuts to risk corridor reimbursements that it had been counting on imperiled its bottom line last year. It was placed under administrative supervision by the Oregon Insurance Division, and in October 2015, Health Republic announced it was done enrolling new Oregonians in its plans.

Health Republic reported on its January-through-June 2016 financial situation as it continued to wrap up operations with no remaining insured members. It had $1.97 million in remaining cash as of June 30, as it worked to shut down.

Zoom Health Plan

  • First half of 2016 net loss: $642,597, compared to a first half of 2015 net loss: $1,574,411.
  • Cash and equivalents on June 30, 2016: $5,452,335, up from $4,393,810, on June 30, 2015.
  • Total members on June 30: 2,482, up from 217 at the start of the year.

Fledgling health plan Zoom, which is part of the ZoomCare network, has seen its enrollment gradually take off this year. A for-profit plan 20 percent owned by two Endeavour Capital private equity funds, and 80 percent owned by ZoomCare founders doctors Albert DiPiero and David Sanders, the Zoom Health Plan is bringing a very different take on integrated insurance-and-clinics to Oregon.

Unlike Kaiser and Providence, which both own massive hospitals and campuses, Zoom’s insurance plan sends members to a network of small neighborhood-based high-tech medical offices. It was launched last year, and ended 2015 with just 217 members enrolled. That had climbed to 2,421 as of March 31 of this year. By June 30, several dozen more members had joined, bringing enrollment to 2,482.

Like most insurers in Oregon, Zoom reported a financial loss for the first half of 2016. But its $642,597 net loss represents an improvement over the $1.6 million loss it reported in the first half of 2015, as it was just getting off the ground. Over that period, Zoom has also improved its cash position.

Courtney Sherwood can be reached at [email protected]. Follow her on Twitter at @csherwood.

News source: 
This article is for premium subscribers. If you are one, please sign in below.
You can see two more premium stories for free. To subscribe, click here. We depend on premium subscriptions to survive, and they are tax deductible.