Blue Cross Blue Shield of North Carolina breaks even for ‘15

The Associated Press

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RALEIGH – Blue Cross and Blue Shield of North Carolina said Friday that it essentially broke even in 2015 even as losses related to coverage of customers enrolled through the federal health care law mounted.

The state’s largest health insurer reported net income of $500,000 last year, improving from a $51 million loss in 2014.

The company said strong investment income and improved results in core businesses such as Medicare Advantage offerings helped overcome a $282 million loss on plans that comply with the Affordable Care Act. A year ago, losses related to ACA plans were $123 million, according to the Durham-based not-for-profit company.

“ACA customers were older and sicker and continue to utilize more services and drive medical costs higher,” Gerald Petkau, the company’s chief financial officer, said of the results, which were filed with the state Department of Insurance.

The extent of these losses is being cushioned somewhat by payments the federal government has made to the company to deal with uncertainty in enrollment levels and medical expenses of the newly insured. Two of the three risk provisions end after this year, however.

BCBS has about 3.9 million customers, of which 1.4 million are fully insured through the company. Of that number, 340,000 are enrolled through the Affordable Care Act. Those BCBS policies can be bought through the federal online health care website or through the company.

The losses, however, are making the company scrutinize whether it will continue in 2017 to offer ACA plans in all 100 counties, scale back its coverage area and plans, or withdraw from offering the subsidized plans all together. A decision must be made by late summer, according to Petkau.

“We’re doing everything we can to participate, but we have to evaluate the sustainability and affordability for our customers,” Petkau said adding “all options are on the table.”

The company was permitted to raise 2016 overall premium rates on average by 32.5 percent, which Petkau said he hopes will help financially stabilize its ACA offerings. But he acknowledged the higher rates could reduce the number of ACA enrollees.

Total BCBS revenue increased slightly from $8 billion in 2014 to $8.2 billion in 2015. Of the 2015 amount, $1.8 billion came from premium and government subsidies through ACA plans, Petkau said. The sickest or most expensive 5 percent of ACA enrollees at the company generated $1.3 billion in claims alone, he said.

Another company document filed with the Insurance Department showed increases for overall compensation for top executives during 2015 after it fell during 2014. BCBS reported President and CEO Brad Wilson received nearly $3.8 million in total compensation, including a $1 million salary and a bonus that grew by more than $460,000 compared to 2014.

Petkau said executive compensation is based in part on several factors over multiple years and that “salaries are in line with other companies of our nature and size.”