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Health insurance companies look to contain costs

By Maryalene LaPonsie on October 17th, 2012

In the face of health reform legislation and rising health care costs, more than 200 industry leaders recently convened for the 2012 Customer Congress to discuss challenges related to quality improvement and cost containment in the health care field. The three-day event was organized by Inovalon Inc., a health care solutions provider.

Participants included representatives of health insurance plans, pharmaceutical companies, academic institutions and other stakeholders. Through a series of breakout sessions, panel discussions and keynote speakers, the group focused on strategies to address the following challenges:

  • Improving quality of care
  • Reducing costs in the health care system
  • Improving patient outcomes

Part of the discussion in Scottsdale, Ariz. revolved around the importance of reducing costs without harming patient care.

"It is part of our ethical responsibility to go after the waste in health care without harming the quality," Margaret O'Kane, president and CEO of the National Committee for Quality Assurance, said in her keynote address. "The cost-quality tradeoff isn't real. We can do better and we can do better with less."

Health insurance companies see revenues decline

At the same time the 2012 Customer Congress was taking place, insurance rating firm A.M. Best was reporting that revenues for some health insurance companies were on the decline.

A.M. Best found revenues for the largest publicly traded health insurers declined during the first six months of 2012. The drop was attributed to an increase in medical costs from 2011.

While many of the larger health insurance companies saw their revenues decline, most insurers reported a profit. However, two companies had net losses through June 30, 2012: Molina Healthcare and Centene Corporation.

In the case of Molina, which lost $19 million, the losses can be traced to its aged, blind and disabled business contract in Texas. Meanwhile, Centene's net loss of $11 million has been attributed to increased medical costs within its Medicaid business. Celtic Insurance Company, a subsidiary of Centene, also reported higher medical costs which contributed to the corporation's declining revenue.

With major provisions of the Patient Protection and Affordable Care Act set for implementation in the next year and a half, medical insurance companies will likely face new challenges that may further affect their profitability.

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