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Published in Breaking News

Blue Cross Blue Shield reports $68 million loss for 2015

BY Tuesday, March 01, 2016 03:17pm

Blue Cross Blue Shield of Michigan attributes a “modest” $68 million loss for 2015 to one-time charges to settle litigation and losses in its heavily-subsidized Medigap supplemental policies for Medicare recipients.

Minus the approximately $500 million cost of the two — $200 million for Medigap subsidies and $300 million for settling litigation — Blue Cross Blue Shield would have finished last year above the break-even mark, said Vice President of Finance Paul Mozak.

“As a nonprofit mutual, we try to manage our core health business on a very narrow margin,” Mozak said. “We worked diligently as a nonprofit mutual to manage our financial performance in 2015. While we always seek reasonable, positive margins, it’s not uncommon that events can happen during the course of the year to turn margins negative, and that’s what occurred in 2015.”

The $68 million net loss for 2015 includes all of Blue Cross Blue Shield’s nonprofit and for-profit subsidiaries and came on total revenues of $24.2 billion with a modest underwriting loss on commercial health policies. The bottom line translates to a negative margin of about 0.3 percent, Mozak said. Subsidies for Medigap policies will end in 2016, he added.

2015 was the first time that Blue Cross Blue Shield did not lose money on individual health policies.

“We have the right products at the right price, and we’ve been successful in the individual market for 2015,” he said.

Blue Cross Blue Shield in past years has recorded losses in the individual market in excess of $100 million. The turnaround came amid what Blue Cross Blue Shield spokesman Andy Hetzel calls an “extremely volatile” individual market that continues to mature.

Despite the volatility, “we remain committed to the individual market for the long term,” Hetzel said.

Blue Cross Blue Shield’s annual results for last year compare with overall 2014 net income of $272 million on total revenues of $23.1 billion for a 1.2 percent margin.

The $344.2 million loss in Blue Cross Blue Shield’s health insurance business was far deeper on revenues of $7.50 billion, with a $572.9 million underwriting loss on health policies and $206.7 million gain on investments. That compares with 2014 net income of $295.0 million on $7.44 billion in revenues, a $97.5 million underwriting gain, and $208.3 million in investment income.

The state’s largest health insurer added nearly 45,000 members during 2015 to grow membership to 4.53 million, including HMO subsidiary Blue Care Network.

“We at Blue Cross are thrilled to remain the leading choice for health insurance among people who call Michigan home, and people elsewhere who work for Michigan companies,” said President and CEO Daniel Loepp.

Read 3860 times Last modified on Tuesday, 01 March 2016 16:02
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