Missouri HMOs surpass profit records by 78%

After posting record profits in 2002, HMOs operating in Missouri broke that mark by 78 percent last year despite substantial enrollment declines.

Department of Insurance Director Scott Lakin reported March 29 that 2003 financial reports show all 22 HMOs active in the state had combined after-tax profits of $266.7 million, compared to $149.7 million in 2002.

Excluding national HMOs like Humana that collect most of their revenues elsewhere, Missouri-based HMOs also increased their profits from the record $123.5 million in 2002 to $208.8 million last year (69 percent).

States across the country are reporting similar results. Texas HMOs posted a sharp upturn in net income but, despite the significantly larger population there, still fell short of the profits posted just by HMOs that largely operate in Missouri.

The increased profits occurred despite major reductions in membership for HMO plans. Missouri-based HMOs reported a 13.8 percent drop in enrollment overall, although exact figures on Missourians enrolled in these plans are not yet available.

"Historically, when HMOs are profitable, consumers have substantially fewer complaints about claims. At the same time, however, much of the profitability reflects an average 67 percent increase in premiums from 1998 to 2002 plus more last year that has not been formally calculated," Lakin said in a news release.

Missouri's preliminary numbers for 2003 show consumers filed 420 complaints against HMOs, down 23.5 percent from the previous year and 46 percent from the peak year of 1999.

Lakin noted that commercial HMOs in Missouri exclusive of Medicaid and Medicare business have been losing membership for five years, falling 25 percent to fewer than 1 million. While HMOs themselves reduced members by becoming more selective about groups they insure in the late 1990s, employers also began turning elsewhere for coverage to give workers greater choice in providers and, more recently, to reduce costs.

The steep rise in premiums has rekindled interest in self-insured, traditional group insurance preferred provider organization plans that allow employers more latitude on reducing benefits and shifting costs to workers and their families.

HMOs provide the broadest coverage in Missouri and became the state's dominant form of health insurance in the late 1990s with no deductibles, co-payments limited to 50 percent and no limits on basic health services, which cover most outpatient and inpatient care except for prescription drugs, therapy and mental health treatment.

Legislation pending this year would permit Missouri HMOs to incorporate unlimited deductibles and co-payments into their plans.