A.M. Best Reports Continued Losses for HMOs in the State of Texas.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Sept. 12, 2002 A.M. Best Co. has increased the number of financial strength ratings on Texas Health Maintenance Organizations (HMOs) this year, releasing ratings on 27 HMOs compared to 26 in 2001. These financial strength ratings include 13 within the secure category while the remaining 14 companies are rated vulnerable. These 27 include three downgrades, four upgrades, two initials, one under review and 17 affirmations. The Texas HMO HMO health maintenance organization. HMO n. A corporation that is financed by insurance premiums and has member physicians and professional staff who provide curative and preventive medicine within certain financial, market continues its poor performance and weakening weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak  en·er n. financial strength. HMOs throughout the nation have reported improvement
in operations, thus able to grow capital in relation with premiums,
while Texas HMOs have trailed the rest of the market, reporting net
losses of almost $500 million during 2001.HMOs in Texas as a whole have experienced over 21 consecutive quarters of losses. The declining earnings can be attributed to rising health care costs, insolvent INSOLVENT. This word has several meanings. It signifies a person whose estate is not sufficient to pay his debts. Civ. Code of Louisiana, art. 1980.. A person is also said to be insolvent, who is under a present inability to answer, in the ordinary course of business, the responsibility providers and the harsh regulatory environment. Texas continues to struggle with health care and the balance among providers, consumers and employers. Higher HMO insurance costs are largely dictated dic·tate v. dic·tat·ed, dic·tat·ing, dic·tates v.tr. 1. To say or read aloud to be recorded or written by another: dictate a letter. 2. a. by increasing health care expenditures, driven by higher than expected utilization, skyrocketing pharmacy pharmacy, art of compounding and dispensing drugs and medication. The term is also applied to an establishment used for such purposes. Until modern times medication was prepared and dispensed by the physician himself. In the 18th cent. expenses and higher costs of providers and hospitals. A.M. Best expects increases in health care expenses will continue until actions by all parties involved take responsibility in controlling costs. Insolvent providers have been an issue in Texas, resulting in additional strain to organizations such as Sierra Health Plans and PacifiCare of Texas. Texas providers have the right to collective bargaining collective bargaining, in labor relations, procedure whereby an employer or employers agree to discuss the conditions of work by bargaining with representatives of the employees, usually a labor union. with the health company, which allows the providers to join forces to settle on the most advantageous reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. rates. Therefore, A.M. Best expects the ultimate result could be both providers and insurers will need to be responsible in managing their health care expenses. Texas is a highly regulated state, which places additional pressure on the industry by trying to force a balance. During 2001, Southwest Texas HMO, Inc., Aetna Health of North Texas, Inc., Aetna Health Inc. (Texas Corporation) and PacifiCare of Texas, Inc., reported an aggregate net loss of $433 million. Further, the Texas attorney general is fining insurance organizations, alleging they were slow to pay medical claims to physician groups and forcing them into bankruptcy bankruptcy, in law, settlement of the liabilities of a person or organization wholly or partially unable to meet financial obligations. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most . The uninsured population continues to grow and will eventually overload See information overload and overloading. Texas' Medicaid program. One of every four residents are uninsured, a rate higher than any other state in the nation. Funding for the uninsured will result in rising costs that will impact the entire health care industry. This will eventually be passed on to the smaller insured membership base to absorb. A.M. Best continues to monitor the Texas HMO market very closely for additional losses and capital deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. . A.M. Best notes the equilibrium equilibrium, state of balance. When a body or a system is in equilibrium, there is no net tendency to change. In mechanics, equilibrium has to do with the forces acting on a body. between provider, consumer and insurer An individual or company who, through a contractual agreement, undertakes to compensate specified losses, liability, or damages incurred by another individual. An insurer is frequently an insurance company and is also known as an underwriter. is not anticipated in the near term. Additional turbulence turbulence, state of violent or agitated behavior in a fluid. Turbulent behavior is characteristic of systems of large numbers of particles, and its unpredictability and randomness has long thwarted attempts to fully understand it, even with such powerful tools as is expected. The financial strength ratings on the 27 HMOs are as follows:
Current Rating Previous Rating
Aetna Health Inc. (a Texas Corporation) A- A-
Aetna Health of North Texas Inc. A- A-
AmCare Health Plans of Texas, Inc. E Cpd
AMERIGROUP Texas, Inc. C++pd C+pd
Amil International (Texas), Inc. Bpd Bpd
CIGNA HealthCare of Texas, Inc. A-u A-
Community First Health Plans, Inc. C++pd C++pd
Community Health Choice, Inc. C++pd C+pd
Cook Children's Health Plan C+pd C+pd
Health Plan of Texas Bpd Bpd
Humana Health Plan of Texas, Inc. B++ B++
One Health Plan of Texas, Inc. A+ A+
PacifiCare of Texas, Inc. B+ B++
Parkland Community Health Plan, Inc. C++pd C++pd
Prudential Dental Maintenance
Organization, Inc. A- A-
Prudential Health Care Plan, Inc. A- A-
Scott & White Health Plan Bpd Bpd
Seton Health Plan, Inc. C-pd Dpd
SHA, L.L.C. C++pd C++pd
Southwest Texas HMO, Inc. A- A-
Texas Children's Health Plan, Inc. C+pd Cpd
UNICARE Health Plans Company of Texas B++ B++u
United Dental Care of Texas, Inc. A- A-
United HealthCare of Texas, Inc. A- A
UTMB Health Plans, Inc. Cpd Cpd
Valley Baptist Health Plan, Inc. B+ C+pd
Value Options of Texas, Inc. C-pd Cpd
A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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