Blues HMOs' enrollees down, profits up


The four health maintenance organizations owned by Blue Cross and Blue Shield of Maryland saw their combined enrollment drop 6 percent last year, according to financial statements filed with the state insurance commissioner.

The loss of nearly 16,000 members occurred despite a Blue Cross effort to increase its market share in a hotly competitive market. The insurer is counting on its HMOs to shore up its future as a leading provider of managed care. To stem the loss, the Blues pared back premium increases and trimmed medical costs.

Despite the enrollment loss, Blue Cross HMO revenues rose 5 percent, and net income jumped 160 percent, to $11.7 million.

The Blues' four HMOs are Columbia Medical Plan, Free State, Potomac Health and CareFirst.

CareFirst incurred a 6.8 percent drop, to 83,000 members. Columbia and Free State, which operated as a unit for most of the year, lost a combined 6.5 percent, down to 154,000. Potomac Health, the smallest, gained 1,168 members, to 13,000.

Only two other companies of the two dozen HMOs doing business in Maryland lost members during 1992.

The Maryland Association of Health Maintenance Organizations said about 1.5 million people subscribe to Maryland HMOs.

Despite its loss of enrollment, Blue Cross appears to have retained the 31 percent of the HMO market in terms of premium dollars that it held in 1991, making it the second-largest in the state, financial statements show.

JTC Overall enrollment, including companies that serve nearby states, grew by almost 10 percent, according to the annual reports filed with the insurance division.

The biggest market share is held by Mid-Atlantic Medical Services Inc., whose HMOs, M.D. Individual Practice Association and Optimum Choice, collected $382.6 million in premiums in the state in 1992, compared with $377 million by Blue Cross' HMOs. Prudential, with sales of $122 million, was third.

Health Plus Inc. saw the biggest gain, 25 percent, and is in fourth place, with $99 million in premiums.

Blue Cross executives said the enrollment loss was due partly to changes in federal programs that occurred just as it restructured and split Columbia Medical Plan and Free State Health Plan into separate HMOs. Columbia has wooed back some federal employees by holding rate increases to 6 percent, half that of competitors, officials said.

The competition for federal workers is particularly fierce because of their large population in Maryland and because of expectations that more of them will be required to join managed-care programs such as HMOs. If so, they can choose between the Maryland Blues' HMOs and others.

James R. Swenson, chief financial officer for Blue Cross, said the HMOs made money despite losing enrollment because of a drop in overall administrative expenses and in the cost of medical care.

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