The healthcare reform law may be upending the business model of health insurers, but so far HMOS are showing healthy profits.
According to a recent report by independent health consultant Allan Baumgarten HMOs in Minnesota had profits of $230.4 million in 2011, made up of $158 million in operating income and $72.4 million in investment revenue.
These same four HMOs agreed to cap the profits on Medicaid over concerns about those profits on the program for the poor, and in 2011 ended up giving up $103 million in combined profits over the cap back to the state. In other words, their net income was even higher than $230.4 million.
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On Medicaid, the insurers had profits of $165.8 million, or 8.5 percent of premiums. While making money on Medicaid programs, the Minnesota insurers also had a good year from employer plans led by HealthPartners, which recently announced its merger with provider group Park Nicollet Health Services.
These same HMOs maintain capital reserves that are $1 billion more than the required minimum in the state. For more on the report click here.
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