The nation's 55 Blue Cross and Blue Shield plans lost an aggregate $1 billion on operations last year, or $200 million more than they lost in 1996, according to figures obtained last week by MODERN HEALTHCARE from the national Blue Cross and Blue Shield Association.
The Chicago-based group doesn't release the figures publicly but makes them available upon request.
Investment income offset the Blues' losses, but the operating results put the nation's Blues plans in the same league as Kaiser Permanente, Oxford Health Plans and other national insurers that hemorrhaged operating cash last year.
Systemwide revenues for the 55 Blues plans rose 5.2% to $87 billion last year from $82.8 million in 1996, according to the association.
About 80% of the system's 55 plans posted operating losses last year, with 10 plans accounting for two-thirds of the losses nationwide, association officials said. In 1996, the system lost $838 million on operations.
The association did not identify the financial results of individual plans.
Despite the operating losses, investment income pushed the plans' bottom line into the black.
Overall, the 55 plans earned $1.1 billion in aggregate profits last year, reflecting $2.2 billion in investment income. That's an increase of $117 million, or 11.5%, from the bottom line in 1996.
Blues officials said they expect operating results for 1998 to be considerably better.
Most of the Blues' chief financial officers predicted their organizations will post improved operating results this year, thanks largely to 1998 premium increases averaging between 5% and 6% but topping 10% for some lines of business.
Patrick Hays, president and chief executive officer of the national association, got himself into hot water late last year by acknowledging that premiums charged by Blues plans could jump more than 10% this year. He subsequently retracted that statement and lowered his estimate (Jan. 5, p. 56). But results to date appear to offer some support for his initial contention.
So far, the premium increases have not caused enrollment to drop, according to Blues officials. Preliminary indications are that enrollment has increased about 1%, despite the steeper rates.
Last year, enrollment jumped 2.5% to 69 million throughout the system, the Blues' highest total enrollment since 1990. Only in the Northeast did the Blues lose enrollees last year.
Much of that growth, which was especially strong in the West, was fueled by significant increases in systemwide PPO, HMO and point-of-service plans. Blue Shield of California alone added more than 400,000 new enrollees last year, including about 260,000 from its pending acquisition of CareAmerica HMO from UniHealth, said Bruce Bodaken, president of Blue Shield of California.
The system's member plans operate 84 HMOs, 72 PPOs and 66 point-of-service plans.
Systemwide, those forms of managed care now account for 63.4% of the system's enrollment, up from just 57.4% at the end of 1996.
"All plans are facing increased competition, but on a national basis the Blues certainly seem to be holding their own in terms of managed care," said association spokesman Chris Martin.