FOUNDATION HEALTH SYSTEMS: Premium Hikes Boost Profit
Foundation Health Systems Inc., one of the state's largest insurers, yesterday announced that its second-quarter profit rose 23% because the company "raised premiums and held down drug and medical costs," Bloomberg News/Los Angeles Times reports. Net income rose to $38.7 million from profit from operations of $31.4 million, and revenue rose 4.8% from $2.16 billion to $2.23 billion. Premiums per member rose 8% last year, and officials indicated that a similar increase is in store this year (8/9). Foundation's expected premium hike is in line with other large managed care companies, including CIGNA, PacifiCare and Aetna, who recently announced similar increases. Foundation officials noted that for each premium dollar, the company spent 85.2 cents on medical care during the second quarter, up from 84.6 cents during the same quarter last year. Still, physicians argue that they have yet to see any benefit from the premium increases. Dr. Marcy Zwelling, an internist in Orange County, said she has not seen a rate increase in the last five years. Referring to the premium hikes, Zwelling said, "The patients feel they've paid for care, but they haven't. They've paid for some HMO executive's third yacht." But noting that managed care premiums were "pretty much flat" from 1995-1999, California Association of Health Plans research director John Schneider said that spending on physician services jumped 29% -- from $31 billion to $40 billion -- during that time (Wolfson, Orange County Register, 8/9).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.