The nation's Blue Cross and Blue Shield plans continued wildfire profit growth in 2003. According to the national Blue Cross and Blue Shield Association, combined net income for its 41 independent affiliates jumped 53% to $6.1 billion in 2003. That follows a 43% earnings increase in 2002 to $4 billion and a 40% increase in 2001 to $2.8 billion. Total 2003 revenue rose 12% to $182.7 billion. Blues plans spent 85.9% of premium revenue on medical claims last year, down from 86.6% in 2002. Administrative costs consumed 10.9% of premiums, down from 11.1% the year before. At year-end, the 41 plans held a combined $31.9 billion in reserves, up 30% from $24.5 billion from 2002. Total enrollment in the plans climbed 4% in 2003 to 88.8 million members, the highest level in 23 years. Read Modern Healthcare's cover story this week on an embarrassment of riches at some Blues plans.
Meanwhile, Washington state Insurance Commissioner Mike Kreidler received a formal recommendation from his staff to reject Premera Blue Cross' proposed for-profit conversion, or approve it only with substantial conditions. The recommendation follows weeks of public hearings, capped Monday by testimony from former Maryland Insurance Commissioner Steven Larsen, who blocked a similar conversion by CareFirst Blue Cross and Blue Shield, Owings Mills, Md., last year. Conversion opponents argue that as a for-profit Premera would have greater incentive to raise premiums, cut reimbursement and abandon rural markets. Premera, Mountlake Terrace, Wash., contends that a conversion would give it greater access to much-needed capital while creating multimillion-dollar foundations to fund healthcare programs in Washington and Alaska. Premera will be allowed to contest the recommendation today, when both sides present closing arguments. Kreidler is expected to issue his final decision July 19. Read a Modern Healthcare Web exclusive on the outlook for Blues conversions. -- by Laura B. Benko