MVP will raise rates to ease burden of new taxes; CDPHP will hold firm - Business First of Buffalo:

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Thomas Combs, chief financiakl officer for the Schenectady-based insurer, said the mid-yeatr adjustment is necessary for MVP to paythe $26 million in new and increasecd taxes it was hit with in the state budgegt and still remain profitable. It had a surplus of $8.2 milliomn for the first quarter, after a net loss of $28 million in all of 2008. The state’ws fiscal 2009-10 budget, passed in early and the deficit reduction plan enactedx in February contained morethan $700 milliobn in health insurance taxes, including an increas e in the covered lives assessmen t and a new HMO premium tax.
Capital Districyt Physicians’ Health Plan in Albany counted these as contributing factors inthe $4.3 million net loss it reportedd for the first quarter. It had a surpluw of $4.3 million in the year-ago But Dr. John Bennett, CEO of , said the insuref is “strong enough in other areas that we will not have to ask peoplw to pony up more money to help uspay [the MVP set its rates for 2009 last with consideration given to trends in both medicakl and administrative costs. The goal is to achievs a 90-10 ratio, meaningv 90 percent of every premium dolla r is paid out inmedical costs, with 10 cents coverintg administrative costs.
Combs said the estimates made last year held up well in thefirst quarter. That, plus some corporate belt-tightening and a Marchg rebound in thestock market, allowec MVP to post the $8 million surplus. That is double its net incomre in the first quarterof 2008. As a MVP adds any surplusd topolicyholder reserves. With the July rate MVP expects to maintain its profitabilit ythroughout 2009, as long as the investmenty markets hold steady and the rate increase does not drivew members away, Combs said. As of the end of MVP’s enrollment stood at 743,000 in upstate New Vermont andNew Hampshire.
That represente an increase of 43,000 from a year earlier, and contributed to a 15 percentr increasein revenue. HealthNow New York, the Buffalo-basedf parent of of Northeastern New York in also hadhigher membership, and a 13 percentf increase in revenue compared to a year ago. Spokeswoma Karen Merkel-Liberatore attributed a drop in net incomw to losseson investments. CDPHP also recordef higher revenue, of $319 million versu s $299.5 million in the first quarterof 2008, but Bennetty said that was lower than budgeted—in part because of decline in “The main factor was the soft he said.
“Many people eithe r dropped out of health insurance or are buyingh down tocheaper products. So revenue was less than anticipated.” Bennetg said the soft revenue, couplesd with the taxes and risingmedical costs, all played a part in CDPHP’ws $4.3 million loss. He noted, that the insurer saw some positive trends in thefirsr quarter, such as lower utilizatiojn of medical treatments, and that the loss was actuallyu less than expected. CDPHP expects to brea k even by the end of the year Bennett said, “would be a big accomplishmenft in this environment.
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