Corporate Research Group’s Weblog

Click here for a copy of Blue Shield of California’s statement that it has withdrawn its request for another individual premium rate increase, which would have affected 340,000 members.  Complete coverage appears in the March 14 issue of Health Plan Market Trends.

Here are three slides from Cigna’s annual investor conference last week.  The first shows how the company’s expatriate healthcare benefits business stacks up against the competition.  The second is a breakdown of international membership by region.  The third is meant to suggest growth opportunities in China.  Overall, Cigna says it expects earnings growth of 10% to 13% annually over the next three to five years.  (Clarification, 3-15-11: The first slide shows expatriate premium equivalents for Cigna’s international business, including the ASO lines of the acquired Vanbreda business.  Separately, Cigna also claims to have the largest number of expatriate members at 740,000).

From a Citi analyis of financial data for 190 Medicaid health plans:

In one of the tougher years in recent memory, it appears Medicaid plans were just barely profitable in 2009, as loss ratios deteriorated about 100 basis points, to 88.4%. There continues to be a big difference in the loss ratios of publicly traded and private Medicaid plans, as the publicly traded plans reported an overall MLR of 86.7%, 320 basis points better than the 89.9% MLR reported by private plans.

With all the recent management changes at WellPoint, I thought it might be helpful to post this org chart from the company’s 2011 investor conference.

This surprises me a bit.  Not that I had any inside information, but combinations of this sort do seem logical for health plans going forward.  But it looks like things got a bit messier than expected when the two organizations sat down to hammer out the details of a merger.

During the due diligence period it became apparent that the savings and efficiencies both organizations were seeking would be more complex to achieve than initially envisioned and the integration of the two organizations would be more costly and time-consuming than anticipated when discussions first began.

In announcing a non-binding agreement in January to explore a merger, Harvard Pilgrim and Tufts had cited the potential for economies of scale on administrative expenses and information technology investment among the rationale for a possible deal.

Christine Arnold of Cowen & Co. remains bullish on behavioral health facility and hospital operator  Universal Health Services (King of Prussia, PA), which yesterday reported a decline in fourth-quarter 2010 profits related to certain charges; however, the company also noted a 5% increase in behavioral health admissions.  Arnold points to broader favorable trends for behavioral healthcare utilization:

Recent studies suggest that both employer benefit changes and consumer awareness should drive behavioral health volume. Only 5% of employers that changed mental health coverage in 2010 dropped benefits while 66% eliminated limits on coverage. Fewer than 10% of Americans have heard of mental health parity.

What’s this mean for health insurers?  It’s yet another sign that healthcare utilization is on the rise.