Question-and-Answer Session
Operator
(Operator Instructions)
Your first question comes from Joshua Raskin - Barclays Capital
Joshua Raskin - Barclays Capital
Question really relates around 2010, and I know it feels like it’s a long way away and there is a lot of moving parts. But you guys have submited your bids. So, I guess I’m just curious from a strategic standpoint, you are rebidding in all your counties including private fee-for-service. You are facing some significant rate pressure, was the strategy to sort of maintain membership or was it to maintain margin, and that’s on the MA side?
Then on the PDP side, you guys talked about letting your margins come in a little bit over a period of time. So, as we think about the PDP business, should we think about a little bit of margin compression and hopefully grow back I guess in 2010.
Richard Barasch
Yes. Let me take the second one first. Yes, we’ve been pretty, vocal and open about the fact that our Part D margins will shrink over time. This year, interestingly, it doesn’t look like they are going to, but each year we feel it’s a more competitive environment. So, I think that’s a reasonable assumption that Part D margins will decrease over a period of time.
As to MA it’s a lot more complicated. There are many-many more moving parts. We’ve been in the insurance business for a very long time. Margin is always something that we care a lot about, we’ve never been sort of market share players, we always bid to make a profit. Having said that, we have several submarkets within our business. We’ve got our core HMO, we’ve got our new PPOs, in addition we’ve got the core markets, in which we will have PPOs either in 2010 or 2011.
Each one of them has a market dynamic that’s a bit different. I think the withdrawal of several of our competitors this year actually makes 2010 quite an interesting year. The question is will people who have been just enrolled from these folks who are withdrawing is going to move to another MA product or are they going to be frustrated and move back to original Medicare or go to Med Supp.
Our view is that a good part of them will go to other Medicare Advantage Products, and we think we are in a good position to benefit from it.
- To read the full transcript on Seeking Alpha, click here »
