Medical Expenses increased $60.6 million or 8.1%. Excluding the effects of changes in estimate charges, medical expenses increased approximately $16.9 million or 2.2%. Medical expenses as a percentage of medical premiums and professional fees decreased from 86.1% to 85.5%, excluding changes in estimate charges and premium deficiency as described below. The improvement is primarily due to the closing and sale of operations with higher medical care ratios, primarily in Texas and rural Nevada, offset by an increase in Medicare members as a percentage of fully-insured members. The cost of providing medical care to Medicare members generally requires a greater percentage of the premiums received.
Net cash used for investing activities during 2000 included $17.5 million in capital expenditures associated with continued implementation of new computer systems, as well as construction, furniture, equipment and other capital needs to support our growth, offset by net proceeds of $10.5 million for property and equipment dispositions. The net cash change in investments for the year was a decrease of $21.6 million as investments were sold to fund working capital needs.
In addition, California law provides that an insurer may not pay a dividend without the prior approval of the state insurance commissioner to the extent the cumulative amount of dividends or distributions paid or proposed to be paid in any year exceeds the amount shown as unassigned funds (reduced by any unrealized gains included in such amount) on the insurer's statutory statement as of the previous December 31. As of December 31, 2000, California Indemnity had unassigned funds of $174,000 from which it could pay a dividend without prior approval. California Indemnity declared and paid no dividends to CII Financial in 1998 but paid $6.0 million of dividends to it in 1999 and $6.8 million in 2000.
We have audited the accompanying consolidated balance sheets of Sierra Health Services, Inc. and its subsidiaries as of December 31, 2000 and 1999, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2000. Our audits also included the financial statement schedules listed in the index at Item 14 (a)(2). These financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedules based on our audits.
DELOITTE & TOUCHE LLP Las Vegas, Nevada February 13, 2001 (except for Note 8, as to which the date is March 16, 2001)
Acquisitions. On October 31, 1998, TXHC completed the acquisition of certain assets of Kaiser Foundation Health Plan of Texas, a health plan operating in Dallas/Ft. Worth and Permanente Medical Association of Texas, a 150 physician medical group operating in that area. The purchase price was $124 million, which was net of $20 million in operating cost support paid to Sierra by Kaiser Foundation Hospitals in four quarterly installments following the closing of the transaction. The purchase price allocation included a premium deficiency reserve of approximately $25 million for estimated losses on the contracts acquired from Kaiser-Texas.