Blue Cross parent axes workers on heels of Obamacare losses

Health Care Service Corp., the largest private employer in Chicago, laid off an undisclosed number of workers this week.

Greg Thompson, a spokesman for Chicago-based HCSC, the parent of Blue Cross health insurance plans in five states, would not say how many people were let go, where they worked or what types of jobs they had.

But in a memo obtained by Crain's, the company said its information technology group has eliminated some maintenance positions. “New external partners” instead are taking on the work. For maintenance and support, consultancies Accenture and Cognizant were brought on as “strategic business partners,” according to a separate company document.

“We determined we must shift the focus of HCSC employees from routine maintenance activities to more strategic services that develop new capabilities that ultimately improve our service to customers,” Steve Betts, the insurer's senior vice president and chief information officer, wrote in the Feb. 2 memo to employees in the Information Technology Group.

Workers who lost their jobs can apply for open positions within the company, the memo said.

The job cuts come on the heels of big losses at HCSC, fueled by capturing a large portion of enrollees who bought health plans on the public health insurance exchange. Through its Blue Cross plans, including in Illinois, HCSC offered some of the lowest-cost policies on the online marketplace, which launched in 2013.

The problem was, like for many insurers around the country, many of the enrollees were sick and expensive. Claims racked up. Some health insurers even closed under the financial stress.

HCSC had a $281.9 million loss in 2014 on $27.71 billion in revenue, compared to a $684.3 million surplus on $22.69 billion in revenue the year before, according to a financial statement. The sharp losses reflect the impact of the first year of the public health exchange on HCSC's business.

Over 2015's first three quarters, the insurer had a $176.1 million loss on $23.4 billion in revenue, according to HCSC's most recent financial statement.

Still, the company is one of the largest health insurers in the country based on revenue and membership, and it has one of the strongest balance sheets in the industry, Standard & Poor's Ratings Services said in a Dec. 16 report. HCSC had about 15 million members at the end of 2015.

Amid the layoffs at HCSC, the company is creating a new organization that will focus on managing relationships and service-level agreements with its external partners, the company memo said. Roles within that organization are new, and HCSC workers can apply.

The insurer has about 22,000 employees companywide.

“Our workforce really fluctuates based on our customers and our business needs and our priorities,” Thompson said.

"Blue Cross parent axes workers on heels of Obamacare losses" originally appeared in Crain's Chicago Business.