BCBSNC states financial loss : Pay My Claims!!

BCBSNC states financial loss

by Charlene Hargrove on 03/04/15

What this basically means is expect increase in premiums, deductibles and out of pocket max for consumers in 2016!!


From the News and Observer:

"Blue Cross and Blue Shield, the state’s largest health insurer, said Friday that it posted its first financial loss in 15 years as a result of insuring high numbers of older and sicker people under the Patient Protection and Affordable Care Act.

The Chapel Hill organization signed up 257,704 people under the federal health care law, which requires insurers to provide coverage regardless of a customer’s health condition.

New enrollees last year swelled Blue Cross’s covered membership to 3.91 million people, and boosted revenue by 25 percent to an all-time high of $8 billion.

But steep medical claims – for hip and knee replacements, heart procedures, specialty drugs and other costs – drove up medical claims from $5 billion in 2013 to $6.4 billion in 2014. Blue Cross also paid $156 million in ACA-related fees, a new cost for the company.

As a result, Blue Cross posted a loss of $50.6 million last year, compared to net income of $92.6 million in 2013. It’s the first annual loss for Blue Cross since 1999.

“While our 2014 results were a disappointment, they were not a surprise,” said Gerald Petkau, senior vice president and chief financial officer. “As a general rule, ACA customers were older and sicker and drove costs higher than we had anticipated.”

The weak financial performance was reflected – albeit incrementally – in executive compensation for the organization’s top officers. CEO Brad Wilson’s total pay package slipped to $2.8 million last year from nearly $3 million in 2013 because of a reduced bonus, even though Wilson’s base salary increased. Six Blue Cross executives saw lower pay in 2014, while four got pay raises.

The architects of the ACA foresaw a surge of sicker customers and created an insurance pool to cover losses for affected insurers. Blue Cross plans to seek $120 million from the pool this year and booked $60 million in pre-tax revenue it expects to collect in the coming three years.

Petkau said if Blue Cross were reimbursed $120 million, the company’s loss would be $10.6 million this year. Other contributors to the company’s 2014 financial loss were reduced Medicare reimbursements from the federal government and increased IT costs.

The ACA losses were exacerbated when President Barack Obama in 2013 allowed people to keep their old insurance plans, which were cheaper than ACA plans. Thousands of Blue Cross customers opted for the cheaper plans, causing a shortfall of expected revenue, Petkau said.

The ACA plans became more concentrated with sicker people, so that the most expensive 5 percent of ACA enrollees brought in $75 million in revenue but cost Blue Cross $830 million in medical claims."


Read more here: http://www.newsobserver.com/2015/02/27/4587438_blue-cross-posts-first-loss-in.html?rh=1#storylink=cpy

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