Health Net Reports 25% 1Q Profit Increase
Health Net Inc., a California-based managed care company, yesterday reported a 25% profit increase in the first quarter, saying it raised premiums "faster than medical costs have increased" and "has controlled other expenses," Bloomberg/Los Angeles Times reports. Backed by a 13% increase in revenue to $2.5 billion, the company's net income rose to $42.4 million, up from $34.1 million a year earlier. Premiums for members of employer-sponsored plans grew 10% and Health Net gained 104,000 new customers in the first quarter, mostly in New York and California -- amounting to 5.5 million members. Health care costs per member increased 10.4%. CEO Jay Gellert said the slowing economy in California could benefit the company as workers move "from the 'new economy' to 'old economy,'" in which employers "traditionally" favor the HMO services that Health Net provides. In addition, rising health costs could cause more employers to "turn to HMOs" as a means to control costs (Bloomberg/Los Angeles Times, 5/2).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.