PACIFICARE: Cuts Costs To Counter Medicare Losses
PacifiCare Health Systems Inc. announced Monday that it "expects to hold its medical costs steady as a share of Medicare premium income as it cuts costs to counter limits on payment growth" for Medicare HMOs. As "the biggest operator of Medicare HMO plans," the Santa Ana-based company "is trying to hold down its costs enough to continue making money from Medicare" at a time when last year's balanced budget law reduced what PacifiCare expected to make from the government program by $20 million. The company estimated that its medical cost ratio for its Medicare HMOs will be about 86.4% next year, about the same as expected for this year. PacifiCare said it plans to raise Medicare premiums 2% next year and hopes its Medicare business will account for 11% of projected earnings increases. CEO Alan Hoops said, "This is a business that allows for health care to be managed. If you are in the health care business ... it's pretty hard to say no completely to Medicare." (Bloomberg News/Los Angeles Times, 12/1).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.