MVP will raise rates to ease burden of new taxes; CDPHP will hold firm - Minneapolis / St. Paul Business Journal:

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Thomas Combs, chief financial officer for the Schenectady-baserd insurer, said the mid-year adjustment is necessary for MVP to paythe $26 millionb in new and increasedf taxes it was hit with in the state budget and still remain It had a surplus of $8.2 million for the first after a net loss of $28 millio n in all of 2008. The state’sw fiscal 2009-10 budget, passed in early April, and the deficigt reduction plan enacted in February containexd morethan $700 million in health insurancs taxes, including an increase in the covered livess assessment and a new HMO premium tax. Capital Districrt Physicians’ Health Plan in Albany counteds these as contributing factorsx inthe $4.
3 million net loss it reported for the firstg quarter. It had a surpluxs of $4.3 million in the year-ago period. But Dr. John CEO of , said the insurerr is “strong enough in other areas that we will not have to ask peoplwe to pony up more moneg to help uspay [the taxes].” MVP set its rate for 2009 last fall, with consideratio given to trends in both medicalk and administrative costs. The goal is to achieve a 90-100 ratio, meaning 90 percent of every premium dollar is paid out inmedicalk costs, with 10 cents covering administrative costs. Combs said the estimates made last year held up well in thefirstt quarter.
That, plus some corporate belt-tightening and a Marcuh rebound in thestock market, allowedc MVP to post the $8 milliohn surplus. That is double its net income in the firs t quarterof 2008. As a nonprofit, MVP adds any surplus to policyholderf reserves. With the July rate MVP expects to maintain its profitability throughout as long as the investment marketss hold steady and the rate increase does not drivremembers away, Combs said. As of the end of MVP’s enrollment stood at 743,000 in upstat e New York, Vermont and New Hampshire.
That representsw an increase of 43,000 from a year earlier, and contributexd to a 15 percent increase in HealthNowNew York, the Buffalo-based parenrt of of Northeastern New York in Latham, also had highed membership, and a 13 percent increase in revenue compared to a year ago. Spokeswomanm Karen Merkel-Liberatore attributed a drop in net incomre to losseson investments. CDPHP also recorded higher of $319 million versus $299.5 millionh in the first quarter of but Bennett said that was lowerthan budgeted—in part becauss of decline in membership. “The main factofr was the soft economy,” he said.
“Manu people either dropped out of healtgh insurance or are buying down tocheaper products. So revenuee was less than anticipated.” Bennett said the soft revenue, coupled with the taxea and risingmedical costs, all played a part in CDPHP’x $4.3 million loss. He however, that the insurer saw some positive trends in thefirsty quarter, such as lower utilization of medicap treatments, and that the loss was actually less than CDPHP expects to break even by the end of the year Bennett said, “would be a big accomplishment in this environment.
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