Net profits at the nation's HMOs rose 10.7% to $11.4 billion last year as premium increases began to level off and insurers became more financially stable, according to a report by financial ratings firm Weiss Ratings, Jupiter, Fla. The results follow an 87% earnings gain in 2003 to $10.3 billion and an 83% gain in 2002 to $5.5 billion. Three Blue Cross and Blue Shield plans enjoyed the largest increases: Not-for-profit Highmark, Camp Hill, Pa., earned $213.6 million in 2004, up from a net loss of $13.2 million in 2003; not-for-profit Regence Blue Cross and Blue Shield of Oregon, Portland, earned $39.8 million, up from a net loss of $68.5 million in 2003; and Blue Cross of California, a unit of for-profit WellPoint, Indianapolis, boosted its 2004 net income 43% to $658.2 million. Of the 459 HMOs reviewed by Weiss using year-end 2004 data, 147 were upgraded and 13 were downgraded.
The managed-care industry also continued to consolidate last year, with more enrollment concentrated among the largest insurers. According to the report, insurers with more than 500,000 members controlled 59% of the market in 2004, up from 46% five years earlier. Only 24% of consumers are now enrolled in health plans that cover fewer than 250,000 members, compared with 35% in 2000. -- by Laura B. Benko