It suffered a financial blow on the heels of the Obamacare health insurance exchange, but now Health Care Service Corp. has significantly narrowed its losses.
The Chicago-based parent of Blue Cross and Blue Shield plans in five states, including in Illinois, shrank its net loss in 2015 to $65.9 million, compared with $281.9 million the year before, according to a new financial statement. The insurer, one of the biggest in the country, generated $31.2 billion in total revenue in 2015, a 12.6 percent increase from 2014.
It's not exactly clear how the insurer improved its bottom line.
"As a result of the decision we made a few years ago to aggressively enter the government programs and ACA retail businesses, our results over the last two years have looked different than prior years,” HCSC spokesman Greg Thompson said in a statement. "While these initiatives support our goal to serve the diverse needs of our policyholders and expand access to health care to new populations, they have proved financially challenging. This was expected and is largely a result of the tremendous amount of change occurring in the reforming retail market."
But the insurer changed its strategy, like many of its rivals close to home and nationwide, after it lost a lot of money on the public exchanges. Many more sick and, ultimately, expensive people than expected flocked to the online marketplaces, which were launched in 2013 under the Affordable Care Act.
HCSC made some health plans pricier, increasing them by double digits in some cases. Notably in Illinois, for the enrollment period that began in the fall, the carrier eliminated its popular (but expensive) broad PPO plan in favor a narrower plan that has fewer doctors and hospitals people can see in exchange for discounted rates. Just last month, HCSC shed an undisclosed number of workers, including some in its information technology group.
After the Obamacare exchanges debuted, the insurer suffered a $281.9 million loss in 2014 on $27.71 billion in revenue, compared with a $684.3 million surplus on $22.69 billion in revenue the year before, according to a financial statement.
Despite this, HCSC has one of the strongest balance sheets in the industry, with about 15 million members at the end of 2015, Standard & Poor's said in a Dec. 16 report.
As it hustled to turn its finances around, HCSC in just the last three months of 2015 narrowed its loss by about $110 million, the new financial statement shows.
"Blue Cross parent trims Obamacare losses" originally appeared in Crain's Chicago Business.