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November 03, 2014 at 12:26 PM
Another publicly traded health insurer, Health Net Inc., has given investors a peek at how the new health insurance world is working as it releases third-quarter earnings.
Health Net (NYSE:HNT) has bad news for agents and brokers hoping for the Patient Protection and Affordable Care Act (PPACA) public exchange system to just go away: Executives at the company have not given many details about their exchange qualified health plan (QHP) business, but they sounded happy with it as they talked about it today during a conference call they held with securities analysts.
The company recorded a net loss for the quarter as a result of $106 million in charges related to a big, seven-year outsourcing agreement. It would have reported $97 million in net income if not for the charges related to the outsourcing deal.
Here are some takeaways from the company’s earnings announcement for the quarter and from the analyst call.
1. Business looks fine, overall.
Health Net is reporting an $8.9 million net loss for the quarter on $3.8 billion in revenue, compared with $67 million in net income on $2.8 billion in revenue for the third quarter of 2013.
The company ended the quarter providing or administrating health coverage for 5.9 million people, up from 5.3 million people a year earlier. The number of people with individual health insurance increased to 370,000, from 122,000.
Jay Gellert, Health Net’s chief executive officer, said the company now covers about 306,000 people through the state-based Covered California exchange in California and federally run exchange in Arizona.
The exchange plan lapse rate has been comparable to the lapse rates Health Net before the exchange system came to life, Gellert said.
Health Net hopes to add about 100,000 net new exchange plan enrollees in 2015.
2. Medical costs in Health Net’s markets remain subdued, both at exchange plans and at other plans.
In Health Net’s main region, the Western region, commercial health care costs per member per month fell to $323 in the third quarter, from $326 in the third quarter of 2013.
