Formerly known as Hospital Service Corporation, Health Care Service Corporation is a not-for-profit health insurance company in the US. According to the company’s latest financial documents, the company recorded a turnaround profit of $869 million in the first quarter of 2017. This comes around $1.3 billion turnaround after 2016’s first quarter loss of $442 million.
Health Care Service Corporation reversed ACA losses!
Although the Affordable Care Act (ACA) exchanges in some areas are hurting; however overall are not collapsing. Many insurance companies in the United States are continuing to do well just like Florida Blue and many are turning things around just like Health Care Service Corp. Covering nearly 1.1 million people in ACA plans, HCSC carries a lot of weight, and thus considered as the second largest Blue Cross and Blue Shield, just after Anthem.
About HCSC!
Headquartered in Chicago, Illinois Health Care Service Corporation was founded in the year 1936. It is the licensee of the Blue Cross and Blue Shield Association for five states in the United States. These states include Illinois, Montana, New Mexico, Oklahoma, and Texas.
How the profit level got inflated?
According to the financial documents submitted, a few one-time items are responsible for inflating the overall profits of HCSC in the first quarter. For example, the Congress suspended the ACA’s health insurance tax for 2017. Even the accounting rules now require an insurer to book its entire fee in the first quarter itself. Along with the one-time items, the insurer in order to offset the costly medical claims has also raised premium prices a lot.
Carl McDonald, HCSC’s divisional senior vice president of treasury and business development said, ‘We still would’ve been profitable’. He further added, ‘It’s really been the individual business that’s driven the turnaround this year’.
The steps taken by HCSC!
Health Care Service Corp. has lost money in the ACA marketplace, so took a lot of fundamental steps in order to change its position. They empathized on creating narrow network of doctors and hospitals. They hiked premiums to accounts depending upon how sick people in the individual market are. Lastly, elimination of the ACA insurance industry fee proved to be icing on the cake and that’s the reason large companies are constantly pushing for its permanent removal.
Looking ahead for the future!
McDonald wouldn’t say what the company was doing for the financial year 2018, as rate filing deadlines are approaching and even uncertainty lingers around ACA’s subsidies for low-income people. He said, ‘At this point, it’s hard to say’.
Date: May 29, 2017