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Tennessee: Investments boost BlueCross’ profit 53%

By: Mike Pare
(Contact)

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Mary Thompson

BlueCross BlueShield of Tennessee got healthier in 2007 as the insurer posted sharply higher earnings with results spurred by record performance from its investments.

Chattanooga’s largest private employer earned $172.8 million in 2007, up 53 percent over the prior year. That’s just off a high of $176.8 million it drew in 2005, according to the insurer.

“We’re proud of our performance and the strength the company has,” said BlueCross spokeswoman Mary Thompson.

BlueCross reported a $101.5 million gain from investment income, up from $35.6 million in the prior year.

“We were fortunate to rebalance our portfolio at the height of the value of the equity market,” Ms. Thompson said.

Premium income also rose last year, up 8.8 percent to $2.7 billion, according to the insurer. Total revenue swelled to over $3.2 billion, the company reported.

Still, BlueCross Chief Executive Officer Vicky Gregg said in the insurer’s annual report that America’s health care system is at a crossroads.

“The large and growing consensus is that the current system needs to be fixed,” she said.

A study by the Robert Wood Johnson Foundation reported that American workers with family health insurance coverage have seen their premiums jump 10 times faster than incomes from 2001 to 2005.

In Tennessee, the total family premium per enrolled employee rose 32.1 percent in the period, the study showed. In Georgia, the rise was 26.7 percent, it said.

Brian Quinn, program officer for the foundation, said employers and employees are feeling the pinch.

“The anecdotal evidence is that the cost is continuing to rise,” he said.

Russ Blakely, president of Russ Blakely & Associates in Chattanooga, said the estimated increase in medical costs in the next year is about 11 percent or 12 percent.

“It’s worse in our area than in other parts of the state,” he said. “We’re probably the unhealthiest section in the state.”

He said employers are having a lot of conversations about doing something related to employee wellness.

“All evidence suggests that 70 percent of what drives costs can be modified by living healthier lives,” Mr. Blakely said.

BlueCross also reported it had $1.2 billion in statutory reserves in 2007. The insurer said $710 million of the total is required by the Tennessee Department of Commerce and Insurance.

The remainder permits the business to put money into new technology or make other investments, Ms. Thompson said.

BlueCross reported it could operate 71 days using only reserves.

Scott Wilson of BlueCross said the company is taking a prudent course.

“That benefits the whole state,” he said about the insurer that served 2.8 million Tennesseans last year, down 7.7 percent due to declines in TennCare membership.

The business plans to shift its some 4,000 workers in the city to its new $299 million corporate headquarters under way atop Cameron Hill next year.