- BlueCross BlueShield of North Carolina (BCBS of NC) earned positive ACA health plan revenues after years of financial losses, citing low medical claims and more available consumers after other payers exited the sale of plans through federal marketplaces.
Payers like UnitedHealthcare and Aetna exited the sale of marketplace health plans in North Carolina, allowing BCBS of NC to add nearly 200,000 new beneficiaries into its ACA membership.
BCBS of NC also found that these new beneficiaries were healthier than expected and did not report as many high claims than projected.
“Overall, the company experienced a high turnover of its customer base from 2016 to 2017, and lower claims for these new customers contributed to the company’s financial performance,” BCBS of NC said in a statement.
BCBS of NC’s positive earnings were additionally surprising since the payer’s total medical claims increased from $5.8 billion in 2016 to $6.6 billion in 2017.
The primary increases in claims came from the use of injectable drugs for both chemotherapy and non-chemotherapy uses, specialty drugs, inpatient cardiology costs for coronary bypasses and heart surgery, and higher rates of out-of-state lab testing.
Even though BCBS of NC earned nearly 7.8 cents per every revenue dollar in 2017, the payer said that ACA volatility and unhealthy membership will continue to sporadically shift the potential to earn incomes.
The payer’s total ACA membership remained the unhealthiest out of all its member groups, like in previous years. ACA members used the ED and inpatient care services more than double the rate of other health plan members.
BCBS of NC lost nearly $485 million from the sale of ACA health plans from 2011 to 2016 and finally began to earn a profit in 2017. However, the payer’s other business segments and health plan products have allowed it to earn revenues slightly above or below yearly operating margins.
“We manage the company on a long-term basis, which has allowed us to remain in the ACA market and in all 100 North Carolina counties through years of volatility,” said BCBS of NC CFO Mitch Perry.
The uncertain ACA political climate continues to play a role in ACA health plan profitability because of the financial assistance of now-removed ACA components would provide payers, BCBS argued.
President Trump’s removal of the ACA’s cost-sharing reductions (CSRs) and legislative approval to eliminate the individual mandate would have allowed BCBS of NC to lower consumer premiums rates to ensure profitability and cover claims expenses.
“Last year we saw changes to two key provisions of the ACA, eliminating CSR payments and dropping enforcement of the individual mandate. The longer-term effects of these decisions and ongoing uncertainty in Washington will likely lead to continued volatility,” Perry said.
“In mid-2017, Blue Cross NC saw claims levels stabilizing in the ACA market and took steps to lower its initial average rate increase request for 2018 ACA plans from 22.9 percent to 14.1 percent,” he continued. “If CSR payments had been maintained at the federal level, the company’s requested rate increase would have been near zero.”
The experience BCBS of NC had within the ACA marketplace is unique as other payers across the country attempted to limit their financial losses by exiting the exchanges.
In 2017, large commercial payers including Aetna, Anthem, Humana, and other BCBS divisions exited ACA marketplaces citing hundreds of millions of dollars in financial losses.
Most prominently, Aetna lost nearly $700 million from 2014 to 2016 in ACA exchange plan membership and exited completely from the exchanges.
ACA volatility continues to change payer expectations of the ACA health plan market as policy changes forecast a rocky 2018 for the law and individual health plan markets.