Blue Cross and Blue Shield of Minnesota and its family of companies today announced audited financial results for 2016. Blue Cross ended the year with a net operating loss of $322.4 million on full-year revenues of $12.1 billion, for a negative operating margin of 2.7% and a pre-tax net loss of $194.4 million. For the year, $11.1 billion of medical claim payments were incurred which represented 92 cents of every premium dollar going directly to cover health care costs. Additionally, total member enrollment grew from 2.75 million to 2.9 million members.
The 2016 operating deficit represents continued losses in the individual market and larger than anticipated cost pressures and utilization within the Medicaid segment.
Individual segment losses for Blue Cross were $142 million for 2016, compared to a $265 million deficit within the segment for the previous year. While year-over-year losses decreased significantly, enrollment in Blue Cross individual plans declined by approximately the same percentage, resulting in a claims-paid to-revenue-received ratio of 108.6% for 2016. Factoring in 2016 results, Blue Cross has lost nearly $538 million on individual plans over the past three years.
“A shrinking and unbalanced risk pool, combined with ongoing shifts and instability within state and federal rules, contributed to ongoing volatility within the individual market in 2016,” said Michael Guyette, president and CEO of Blue Cross and Blue Shield of Minnesota. “The high cost of health care has translated to a significant jump in premiums, and the size of the individual market in Minnesota has decreased by one-third since 2014 – a trend we clearly need to reverse. The dollars coming in, via premiums, aren’t covering the dollars going out in payments to hospitals, physicians and drug companies.”
Blue Plus, the HMO subsidiary of Blue Cross and Blue Shield of Minnesota, reported an operating loss of $174.7 million on revenues of $1.8 billion, for a negative operating margin of 9.6%. The administration of government health programs accounted for 97% of 2016 revenue. The overall performance of Blue Plus was driven by $167 million in operating losses in the Prepaid Medical Assistance Program, the state Medicaid program in Minnesota.
“Our HMO expanded its Medicaid presence across the state in 2016, and in turn, saw our enrollment triple,” Guyette said. “With unprecedented growth in Medicaid utilization levels, current reimbursement rates are not sustainable for the marketplace. As a key Medicaid insurer, Blue Plus is working with health care providers to strengthen efforts to contain costs in the face of rapidly rising per-enrollee spending.”
In addition to these financial results, Blue Cross undertook several initiatives in 2016, including:
- Announced plans for a new health brand to advance innovation and diversification strategies and extend the portfolio of diversified companies
- Launched a new four-year strategic plan to advance four key business goals: consumer loyalty, net revenue growth, health improvement and financial stability
- Set a company record in the acquisition of new small employer group business
- Opened the first Blue Cross retail center in Greater Minnesota, making Duluth the company’s third retail location to open in three years
- Introduced a new ancillary portfolio of Blue-branded dental and vision products
- Achieved a 4 star rating and 4.5 star rating on the SecureBlueSM Minnesota Senior Health Options plan and Platinum BlueSM with Rx Cost Plan, respectively, from the Medicare STARs program
- Invested more than $20 million in Minnesota communities through the Blue Cross and Blue Shield of Minnesota Foundation and Center for Prevention
“Blue Cross remains committed to Minnesota, and we want to ensure that our operations and financial structure support long term success within the state — preserving our ability to provide stable coverage for our nearly 3 million members,” said Guyette. We’re working to shape and rebuild how healthcare is designed, delivered, and experienced to ensure a more affordable and sustainable healthcare system for our members.”
Date:April 03, 2017