4. The possibility that the Company is not able to expand its service territory as planned due to regulatory delays and/or inability to contract with appropriate providers.
In recent years, state legislatures in the Company's service area have been active in health care reform legislation targeted at the small group market, i.e., usually for groups of 2 to 50 employees. This small group reform is now in place in Maryland, Virginia, Delaware and North Carolina, but not in Washington, D.C. or West Virginia. Although different in many of the details, this type of legislation generally requires all HMOs and insurers that offer small group coverage to accept all small employers who apply for coverage and to guarantee coverage to their employees seeking coverage regardless of their health status. The legislation also requires renewal of these small group employer plans, limits rate renewal increases, mandates adjusted community rating and eliminates pre-existing condition limitations either entirely or within a short period of time, usually six months.
Consolidated net income for the Company was $61,124,000 and $54,530,000 in 1995 and 1994, respectively, an increase of 12 percent. Earnings per share on net income increased 11 percent from $1.15 in 1994 to $1.28 in 1995. All earnings per share amounts reflect the 100% stock dividend paid to stockholders on August 5, 1994 (see Note 12 to the consolidated financial statements). The increase in earnings is primarily
Revenue in 1995 increased 27 percent to $955.4 million from $749.9 million in 1994. A 27 percent increase in net average HMO and indemnity enrollment resulted in an increase of approximately $197.2 million in health premium revenue and a 2 percent decrease in average premiums per HMO and indemnity enrollee reduced health premium revenue by approximately $18.2 million. Health premiums per enrollee have declined due to the combined effects of an increasing relative percentage of Virginia Medicaid HMO members with lower per enrollee revenues and the volatility of revenues from groups with alternative funding arrangements (i.e., revenues vary in a more direct way with medical expense) coupled with management's plan to price its commercial products competitively (see Note 1 to the consolidated financial statements). Although health premiums per member declined in the current period as compared to the prior year period, management does not believe that future periods will necessarily follow this pattern. This is a forward-looking statement. See "Forward-Looking Information" above for a description of the risk factors that may affect health premiums per member.
Fee and other revenue increased $5.6 million or 57 percent primarily due to membership increases in PPO and administrative services only ("ASO") products. Total PPO and ASO membership grew from 698,000 at December 31, 1994 to 838,200 at December 31, 1995, an increase of 20 percent. Service revenue from the Company's home health care subsidiaries contributed $18.9 million in revenue in 1995, and the introduction of indemnity life, accidental death and disability products in 1995 contributed $1.4 million in revenue.
Total tax deposits made by the Company in 1995, 1994 and 1993 were approximately $27,266,000, $25,191,000 and $15,656,000, respectively.
1. Certain 1994 quarterly revenue and expense amounts are different from the amounts originally reported due to reclassifications necessary to conform to the current presentation.