Health reform doesn't make its biggest splash until 2014, but health plans are getting their feet wet this year having to comply with numerous new mandates in the next 12 months. Among the most challenging are paring down administrative expenses and spending more revenue on medical care, as well as dealing with reduced subsidies in the Medicare Advantage program. California's major commercial carriers maintained comfortable profit margins in 2009, and should be able to maintain the status quo through the sluggish economy and first-year impacts of reform. Insurers in general have read the tea leaves and are no longer pricing aggressively to gain market share. Meanwhile, changes are afoot on the pharmacy front, with more intensive medication reviews in Medicare Advantage, the continued trend toward mail-ordered drugs and the possibility that the state's largest healthcare purchaser may start charging its members more out-of-pocket for prescriptions. Not to be left out of the world of Facebook and MySpace, Health Net of California is exploring the use of social media to reach out to its younger insured members. Blue Shield is partnering with a hospital system and a purchasing coalition in a joint effort to improve both quality and cost efficiencies in hospital care.

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