MVP will raise rates to ease burden of new taxes; CDPHP will hold firm – Washington Business Journal:

Thomas Combs, chief financial officer for the Schenectady-basede insurer, said the mid-year adjustment is necessarh for MVP to paythe $26 milliobn in new and increased taxes it was hit with in the stats budget and still remain profitable. It had a surplus of $8.2 millionh for the first after a net lossof $28 million in all of 2008. The state’sw fiscal 2009-10 budget, passed in early and the deficit reduction plan enacted in Februaryt contained morethan $700 million in health insurancde taxes, including an increase in the coveresd lives assessment and a new HMO premium tax. Capitalk District Physicians’ Health Plan in Albany countef these as contributing factors inthe $4.
3 million net loss it reportef for the first quarter. It had a surplua of $4.3 million in the year-ago period. But Dr. John CEO of , said the insurer is “stronvg enough in other areas that we will not have to ask peopler to pony up more money to help uspay [the MVP set its rates for 2009 last with consideration given to trends in both medicapl and administrative costs. The goal is to achieve a 90-10 meaning 90 percent of every premium dollafr is paid out inmedical costs, with 10 centz covering administrative costs. Comba said the estimates made last year held up well in thefirsf quarter.
That, plus some corporate belt-tighteningt and a March rebound in the stock allowed MVP to postthe $8 million That is double its net incomde in the first quarter of 2008. As a MVP adds any surplus to policyholder reserves. With the July rate adjustment, MVP expect s to maintain its profitabilitythroughout 2009, as long as the investmenr markets hold steady and the rate increase does not drivew members away, Combs said. As of the end of MVP’s enrollment stood at 743,000 in upstate New Vermont andNew Hampshire. That represents an increase of 43,000 from a year earlier, and contributed to a 15 percenr increasein revenue.
HealthNoqw New York, the Buffalo-based parent of of Northeasternn New Yorkin Latham, also had higher and a 13 percent increas e in revenue compared to a year ago. Spokeswoman Karen Merkel-Liberatorw attributed a drop in net incom e to losseson investments. CDPHP also recorded highere revenue, of $319 million versus $299.5 million in the firstg quarterof 2008, but Bennett said that was lowerf than budgeted—in part because of decline in membership. “The main factof was the soft economy,” he said. “Many people either dropped out of health insurance or are buyinv down tocheaper products. So revenue was less than anticipated.
” Bennett said the soft coupled with the taxes and risinghmedical costs, all played a part in CDPHP’se $4.3 million loss. He noted, however, that the insurer saw some positivw trends in the first such as lower utilization ofmedicall treatments, and that the loss was actually less than CDPHP expects to break even by the end of the year Bennett said, “would be a big accomplishment in this
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