Blue Cross Blue Shield of Michigan lost money providing health insurance to its members in 2021 due to the COVID-19 pandemic.
The nonprofit insurer reported a $374 million operating loss thanks to $860 million in costs from COVID-19 treatments and testing, BCBSM reported Tuesday.
However, the Blues were able to record $360 million in income on its $32.5 billion revenue for the year after the health insurance losses were offset by the performances of its non-health insurance subsidiaries and investment portfolio, which generated $907 million in positive returns.
In total, the insurer was able to record a 1 percent margin on the year. In 2020, BCBSM recorded income of $646 million in revenue of $30.1 billion and its health insurance business reported an income of $120 million.
"In 2021, Blue Cross put our financial strength behind our members and customers in a time of crisis, providing $860 million in pandemic-related benefits while shielding our members from direct impacts to their premiums," Daniel Loepp, BCBSM president and CEO, said in a press release. "The strong performance of our subsidiaries and investments enabled us to support our members, while also managing a small positive margin to advance our business."
Of the $860 million BCBSM spent in response to COVID-19 last year, $600 million was spent on treatments, $185 million on testing and $75 million in administrative costs.
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Total cost of the pandemic for BCBSM is now $2.1 billion. None of the COVID costs resulted into rising premiums for members, the company noted.
However, premiums rates could rise in coming years due to ongoing COVID-19 mitigations, Paul Mozak, executive vice president and CFO, said in a conference call with reporters.
BCBSM is currently evaluating its rate cycles to determine future premiums, but those evaluations are confidential until rates are determined, Mozak said.
The subsidiaries that help offset elevated pandemic costs in 2021 were Lansing-based worker's compensation insurance provider AF Group, life insurance company LifeSecure Insurance Co., health maintenance organization Blue Care Network of Michigan, Glen Allen, Va.-based information technology company Advantsure and its health management service organization Triarq Health. BCBSM acquired Royal Oak-based Triarq Health in April 2021 for an undisclosed sum.
Despite a challenging year on the company's health insurance side, BCBSM's top executive Loepp received a total compensation in 2021 at $15.7 million, which includes a $12.5 million cash bonus for the company's performance in 2020.
Loepp's compensation increased nearly 36 percent in 2021 from $11.54 million in 2020.
This story first appeared in our sister publication, Crain's Detroit Business.