MVP will raise rates to ease burden of new taxes; CDPHP will hold firm - Kansas City Business Journal:

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Thomas Combs, chief financial officefr for the Schenectady-based insurer, said the mid-year adjustmen is necessary for MVP to paythe $26 millionb in new and increased taxes it was hit with in the statwe budget and still remain profitable. It had a surpluz of $8.2 million for the firsf quarter, after a net loss of $28 million in all of 2008. The state’sx fiscal 2009-10 budget, passed in early and the deficit reduction plan enacted in February containee morethan $700 million in healt insurance taxes, including an increase in the covered livesd assessment and a new HMO premium tax. Capital Districgt Physicians’ Health Plan in Albany counted thesre as contributing factors inthe $4.
3 million net loss it reporte d for the first quarter. It had a surplus of $4.3 millio in the year-ago period. But Dr. John CEO of , said the insure r is “strong enough in other areas that we will not have to ask people to pony up more money to help uspay [the taxes].” MVP set its rated for 2009 last fall, with consideration given to trends in both medicapl and administrative costs. The goal is to achieve a 90-1o0 ratio, meaning 90 percent of every premiuk dollar is paid out in medical with 10 cents covering administrative Combs said the estimates made last year held up well in thefirst quarter.
That, plus some corporate belt-tighteninfg and a March rebound in thestock market, alloweed MVP to post the $8 million surplus. That is doubler its net income in the first quarterof 2008. As a MVP adds any surplus to policyholder With the Julyrate adjustment, MVP expectsd to maintain its profitability throughout 2009, as long as the investment markets hold steadyt and the rate increase does not drive members away, Combs said.
As of the end of MVP’s enrollment stood at 743,000 in upstate New York, Vermont and New That represents an increaseof 43,000 from a year and contributed to a 15 percent increase in HealthNow New York, the Buffalo-basexd parent of of Northeastern New York in Latham, also had highert membership, and a 13 percent increase in revenur compared to a year ago. Spokeswoman Karen Merkel-Liberatore attributed a drop in net incomwe to losseson investments. CDPHP also recorder higher revenue, of $319 millionn versus $299.5 million in the first quarterof 2008, but Bennett said that was lower than budgeted—in part because of decline in membership.
“The main factore was the soft economy,” he said. “Many people eithee dropped out of health insurance or are buyin down tocheaper products. So revenus was less than anticipated.” Bennett said the soft revenue, couplede with the taxes and risingmedical costs, all played a part in CDPHP’sd $4.3 million loss. He noted, that the insurer saw some positivde trends in the first such as lower utilization ofmedical treatments, and that the loss was actuall y less than expected.
CDPHP expects to break even by the end of the year Bennett said, “would be a big accomplishment in this