Most North Carolina HMOs Had Losses in the First Half of 2001

Most of the HMOs operating in North Carolina lost money during the first half of 2001, largely because of "soaring" prices for prescription drugs, new medical technology and other health care services, the Raleigh News & Observer reports. Cigna Healthcare of North Carolina lost more than $432,000 during the first half of the year, and Blue Cross lost approximately $3.3 million on its HMO, although the company earned an overall operating profit. New benefit plans have made it "easier" for people enrolled in a health plan to access specialists, which pushes up costs. In addition, the rising level of unemployment in the state could cause people to see their doctors more often because they are concerned about losing their jobs and health coverage, the News & Observer reports. John McDonnell, a health care consultant with Progressive Benefit Solutions in Raleigh, said, "People are anxious about job security, and I think the mentality is 'use it while you have it.'"

'Just Squeaking By'
United Healthcare of North Carolina and Partners National Health Plan were the only insurers to make a profit on their HMOs in North Carolina. United, which operates the largest HMO in the state, turned a net profit of $5.32 million in the first six months of 2001, while Partners had a net profit of $3.56 million over the same time period. However, United spokesperson Roger Rollman said that United's HMO garnered $2.4 million less this year than it did at the same time last year. Cosby Davis, senior vice president and CFO for Partners, added that his company is "just squeaking by" in the market. Davis said that Partners' profit margin is a "slender" 1.5% to 2%, below the company's target margin of 3% or higher. Dave Garbrick, a health care consultant with Towers Perrin, said that the "weak" numbers posted by HMOs in the state thus far "are a poor harbinger for the rest of the year," since plans "usually show strongest results for the first quarter of the year." He added, "When you see bad earning at this point in the year, the results are going to be worse in the third and fourth quarters" (Fisher, Raleigh News & Observer, 8/28). For further information on state health policy in North Carolina, visit State Health Facts Online.