Kaiser Permanente made strong gains in California's Affordable Care Act insurance exchange last year, contributing to a surge in new members and strong revenue growth.
Oakland, Calif.-based Kaiser gained 650,000 new members in 2015, an increase of 27%, after adding 510,000 new members the prior year, the first year of insurance expansion under the ACA.
That contributed to a 7.6% increase in revenue, the system said in a news release. The release contained limited financial information for the year and the fourth quarter.
The system ended 2015 with a smaller operating surplus and a narrower margin than the prior year, which Tom Meier, senior vice president and treasurer for the system, described as deliberate. Kaiser lowered its rate increases for 2015. Meier said that was in part because of its strong performance in 2014 but primarily to increase the affordability of its plans.
"Our goal is to not simply slow the rise in healthcare costs, but to drive down the costs of healthcare," he said.
The system ended 2015 with an operating surplus of $1.8 billion on revenue of $60.7 billion, or a margin of 2.9%. That's compared with an operating surplus of $2.2 billion on revenue of $56.4 billion, or a margin of 3.9%, the prior year.
Meier said the upswing in membership in 2015 was attributable to the ACA and the system's push to more affordably price its health plans.
Kaiser's exchange health plans were among the most expensive in 2014, but the system reduced its rates for 2015, even as other plans raised theirs, the Los Angeles Times reported in August 2014. Kaiser's 2014 enrollment lagged behind other large health plans in the state, the newspaper reported.
"Kaiser Permanente gives Californians the best value for their health care dollar, including access to our complete network of world-class providers and service," he said. Some plans entered the market with lower-priced, narrow network plans, he said.
Meier said the system plans to tightly manage expenses to hold down its premiums. Net income for the system in 2015 totaled $1.9 billion, down from $3.1 billion the prior year, in part because of the market volatility that has reduced investment returns for not-for-profit hospitals.
For the fourth quarter, Kaiser Permanente reported an operating loss of $98 million on revenue of $15.1 billion, compared with a $63 million operating loss on revenue of $14.2 billion the prior year. Meier said the quarter's losses are a reflection of seasonal patterns for its insurance business. Costs typically increase throughout the year, but annual premiums remain static, he said.