Big profits for Minn. HMOs despite Medicaid money give-back

A new report points to more than $230 million in profits for Minnesota HMOs in 2011.

Modern Healthcare: Minn. HMOs Saw Healthy Profits Despite Capping Medicaid Income
Minnesota HMOs recorded another year of healthy operating profits in 2011 despite agreeing to cap income on state Medicaid underwriting programs, a new analysis of state plans shows. Four HMOs returned $103 million in 2011 to the state after agreeing to limit their income on Medicaid underwriting business to 1 percent of their premiums (Carlson, 9/8).

(St. Paul) Pioneer Press: HMO Profits Strong In 2011, Despite Earnings Cap
As a group, the state's health maintenance organizations reported net income of $230.4 million last year on nearly $7 billion in revenue, said Allan Baumgarten, a health care financial analyst in Brooklyn Park. That works out to about 3.3 cents of profit per dollar of revenue, said Baumgarten, who releases an annual report on health plan finances. … A one-time cap on earnings for 2011 reduced HMO profits from their work with the public health insurance programs operated by the state of Minnesota. Even so, financial results for the industry were "excellent," Baumgarten said (Snowbeck, 9/9).

Minnesota Public Radio: Minn. HMO Profits Keep Rolling In
The findings dovetail with national trends that show the recession has been good for health insurers. Policyholders have cut back on doctor visits because of tight finances and higher out-of-pocket costs such as co-pays. The report finds the HMOs have $1 billion more in reserve than required by law (Stawicki, 9/7).