Highmark's insurance unit, patient volume drove growth in 2024

Strong health insurance sales and higher hospital volumes drove Highmark Health's financial results during the first half of 2024, the company reported Thursday.

Revenue rose 8% to $14.7 billion, operating margin swelled 33% to $307 million and net income increased 7% to $417 million from January through June. Health insurance generated three-quarters of revenue for the Pittsburgh-based nonprofit company, executives said during a telephone briefing.

Related: What insurers got wrong about Medicare Advantage costs

Highmark Health Plan cited strong performance in its commercial business and steady performance for its government-sponsored plans so far this year.

The insurance unit added more than 30,000 members, mostly in commercial plans, after moving into five new southeastern Pennsylvania counties this year. The insurer will launch Medicare Advantage plans in these markets next year, Chief Financial Officer Carl Daley said in an interview. He declined to elaborate on Highmark's Medicare Advantage strategy for 2025.

Highmark Health Plan’s exchange policies picked up about 50,000 enrollees, some from rival companies, who lost coverage during the Medicaid redeterminations process.

Executives said higher inpatient utilization pressured its Medicare Advantage business, but said the effect is less severe than what competitors have reported, including market leader Humana and CVS Health subsidiary Aetna.

“Much of what we're seeing is consistent in pattern with what we're hearing from other payers but not necessarily to the degree of magnitude,” Kate Musler, senior vice president of health plan risk management and provider network, said in an interview.

The health insurance division recorded a 7% increase in operating revenue to $11.1 billion and a 28% jump in operating margin to $304 million during the first half. Highmark Health Plan covers nearly 7 million people in commercial, exchange, Medicaid and Medicare plans in Delaware, New York, Pennsylvania and West Virginia.

Highmark’s health system, Allegheny Health Network, reported 8% growth in operating revenue to $2.5 billion through June 30. Allegheny Health Network has hired more than 800 nurses so far this year as it seeks to emphasize full-time employees over temporary nurses, Daley said during the briefing.

The 14-hospital system reported higher patient volumes across multiple areas, including a 7% increase in emergency department visits, 6% growth in outpatient registrations, a 4% rise in physician appointments, and a 3% increase in inpatient observations and discharges.

Escalating costs for supplies, clinical resources and other needs impeded the financial results, executives said.

Rising drug prices are “one of our industry’s most complex financial challenges” and affected Highmark's insurance and provider businesses in the first half, President and CEO David Holmberg said during the briefing.

The company continues to observe higher utilization of glucagon-like peptide-1 agonists, or GLP-1, medications for diabetes and weight loss, Corey DeLuca, vice president of clinical and specialty pharmacy services, said in an interview.

“We have the management tools in place today, and we continue to look at the emerging evidence around real-world effectiveness and opportunities to ensure we're getting access to the right people at the right time,” DeLuca said.