Staff file photo by Dan Henry/Chattanooga Times Free Press - An aerial of BlueCross BlueShield of Tennessee's headquarters building on Cameron Hill.Perhaps no company - and no industry - knows how to make numbers dizzyingly better than BlueCross BlueShield of Tennessee and the insurance industry as a whole.
First, remember that BlueCross is a nonprofit. Then wrap your head around these disparate "facts," as told by Blue- Cross officials and a document describing the company's 2015 financial performance.
- In the first two years of offering new health plans under the Affordable Care Act (Obamacare), BlueCross BlueShield of Tennessee lost $311 million on these plans, even after raising average premiums in the program by more than 60 percent over those two years. The company plans to ask state regulators for additional rate increases for ACA premiums next year.
- The ACA has helped extend care for just over 250,000 Tennesseans, and nearly two-thirds of them bought Blue- Cross marketplace plans. That's $311 million over two years for 166,425 people - or an average $900-a-year loss for each newly insured person.
- But BlueCross BlueShield of Tennessee still made a profit of $6 million in 2015 (due to investment income and gains from group commercial insurance plans and from BlueCare plans offered under Tennessee's Medicaid program. No doubt you're thinking your group commercial rates went up, too, right? Right. And it wasn't because of Obamacare. Commercial rates are in a separate kettle - and BlueCross made a profit on the premiums paid by all of us, not withstanding Obamacare.)
- Note also that while a $311 million loss in one group category two years sounds like major money to most of us, BlueCross made an overall profit of $199.7 million in 2014. And a record high profit of $256 million in 2013. Meanwhile, in the five years of 2011-2015, the insurer paid a collective $18.1 million in compensation packages for its CEOs. And don't forget it spent $300 million on its new headquarters building atop Cameron Hill.
It should surprise no one - even health care cost experts like BlueCross and other insurers - that when people who have not had health insurance for years suddenly do have the means to see a doctor, their care costs more because they are sicker than they would have been had they had access to appropriate and preventive care over their lives. Commercially insured people with high-deductible plans have a similar problem because they too-often put off seeing a doctor until their condition requires very expensive care.
Nor should it surprise anyone that only the sickest of Tennessee sick folks wound up being insured thanks to the fact that Republicans in half of our states, including Tennessee, did everything in their power to sabotage the ACA. Tennessee refused to expand the program to all but the poorest of the working poor. After all, the working poor making the most money are likely to be those healthy enough to work full-time.
But what should surprise us is the eye-popping profits the big publicly traded health companies have been reporting in this century. And the nation's 36 independently operated nonprofit BlueCross BlueShield companies across the nation have in recent years been following those for-profit examples, according to Wendell Potter, a longtime health care consumer advocate, a New York Times bestselling author, consultant and former health insurance industry executive.
One of the ways the nation's Blues have been able to amass fortunes rivaling the big for-profit guys like Cigna, Aetna and UnitedHealth is to borrow a play from their playbook: "insuring the healthy and shunning the sick," Potter says.
In a 2010 blog post, he noted that the Blues, collectively, had been able to amass such fortunes by avoiding paying for care in exactly the same way the big for-profit companies do. They rapidly began moving their policyholders into high-deductible plans and then spent far less on medical care - and far more on overhead - than they had in the past.
Potter says insurance firms measure what they spend on medical care by what is called the medical loss ratio. In 1993, the average medical loss ratio in the insurance industry was 95 percent, which meant that insurers spent 95 cents out of every dollar they collected in premiums on medical care. In 2010, the average medical loss ratio was closer to 80 percent. But a Citi Investment Research and Analysis study found that 2010 had been the most profitable year in history for the collective Blues plans with a reported $5.5 billion in net income. The study also found the Blues were spending far less on medical care. The medical loss ratio at the Texas Blues, for example, was just 64.4 percent.
So, yes, premium prices keep going up - not just for those with Obamacare, but for all of us.
After all, the middle-men - the insurers - have to stay profitable. Very profitable. Even if they are nonprofit.