N.C. Blue Cross reports 28% decline in net income in 2019
Blue Cross and Blue Shield of North Carolina reported net income of $492 million in 2019, a 28% decline from the previous year after it lowered some premiums and sustained higher medical expenses.
Excluding investment income, the insurer’s operating income declined more than 40% last year, Mitch Perry, chief financial officer, said on a conference call with reporters. Overall, its operating margin was 4.1%, which is in line with the average over the last five years. Including investment income and gains, the margin was 5%.
The state’s largest health insurer, which operates as a not-for-profit, had membership of 3.81 million, up from 3.72 million a year earlier, according to today’s report. Total revenue was flat at $9.9 billion.
“In 2019, Blue Cross NC enrolled more customers, lowered customer premiums and remained financially stable in a volatile environment,” Perry said in a prepared release. “At the same time, we’ve made significant progress on our commitment to better, simpler, and more affordable health care.”
Durham-based Blue Cross said its medical claims and expenses rose 7.4% to $7.3 billion, a $500 billion increase from a year earlier. Annual claims per person increased to $5,600 because of higher costs for drugs and treatments for chronic conditions, such as hemophilia and anemia, Blue Cross said. Perry said the increases were in line with expectations.
Blue Cross reported net income of $685 million in 2018, $734 million in 2017 and $185 million in 2016. It reported flat results in 2015 and a $50.6 million loss in 2014.
“Events like the coronavirus provide an unfortunate example of external factors that can impact both health care costs and financial markets,” Perry said. “Remaining financially strong and well capitalized allows our company to be prepared to meet the health care needs of our members, whatever they may be.”
Blue Cross said it reduced premiums for its individual market customers by an average of 5.5% for 2020, marking the second consecutive year of price reductions. It also reduced Medicare Advantage premiums by an average of 31%. Those programs supplement the federal health insurance plan for senior citizens.