Two area health insurers reported net losses in 2013 that they attribute to increased use of medical services and the “high costs” of implementing the Affordable Care Act.
Both MVP Health Care of Schenectady and CDPHP of Albany have been reporting shrinking incomes for years. But 2013 was the first time in recent history they slipped into the red.
MVP had revenue of $2.5 billion last year, down from $2.7 billion the year before. The health insurer sustained a self-described “minor” net loss of $13.6 million, or a little more than half a percent.
MVP President and CEO Denise Gonick said last year’s financial performance reflects the dramatic changes in modern-day health care.
“There has been a reduction of federal reimbursement for Medicare Advantage plans, while health care costs continue to rise,” she said in a news release. “On top of that is our determination to keep our premiums affordable. This is a challenge we will continue to face this year and next year, and it is a challenge we absolutely intend to meet.”
In the past four years, revenue has shrunk by $400 million and net income has fallen $53.7 million. Membership was on the decline over that period until MVP acquired the Tarrytown-based Hudson Health Plan last year and its 125,000 Medicaid and Child Health Plus members. At the end of 2013, MVP had more than 700,000 members across New York, Vermont and New Hampshire.
One way MVP has attempted to keep health plans affordable is through layoffs. Since May 2012, it has laid off nearly 240 employees and left dozens of positions unfilled.
Gonick said MVP still has “ample reserves” and a financial strength rating of B+ from A.M. Best Co., a credit rating organization that serves the insurance industry.
“MVP is on solid financial footing and is well-positioned to grow in the future,” she said. “We will continue to seek new opportunities and pursue our goal of providing high-quality, affordable health care and improving the health of the communities we serve.”
CDPHP had revenue of $2 billion last year, up from $1.8 billion reported to the state Department of Financial Services one year earlier. The Albany-based nonprofit health plan sustained a net loss of $43.9 million.
CDPHP President and CEO John Bennett attributed the loss to the “high costs” of implementing the Affordable Care Act and other regulatory requirements, like the switch from ICD-9 to ICD-10, a code set that allows new diagnoses to be tracked. Increased use of medical services and smaller Medicaid reimbursements have also contributed to the loss, he said.
“The health insurance industry is experiencing tremendous change,” said Bennett in a news release. “We anticipated losses in 2013 due to high costs of implementing the Affordable Care Act and other regulatory requirements. Despite that, we continue to surpass all our enrollment goals and are investing in products and services that will lead to better health, better care and lower costs.”
In the past four years, revenue has grown at CDPHP while net income has shrunk. Revenue has grown by $700 million since 2010. Net income has fallen $87.7 million. Membership over that period has grown to 447,519 members at the end of 2013.