BlueCross BlueShield of Tennessee boosts profits in 2021 even with $1.1 billion in COVID expenses

Staff file photo / BlueCross BlueShield of Tennessee is headquartered atop Cameron Hill in Chattanooga.

Tennessee's biggest health insurer paid $1.1 billion to help care for those hurt by the COVID-19 virus last year, up 49% from the $738 million spent on COVID-related care in 2020.

Despite the record high cost of the pandemic in 2021, BlueCross BlueShield of Tennessee said it was able to absorb the cost of the pandemic and still boost its net income last year. In a new report about its 2021 results, the Chattanooga-based BlueCross said its net income rose to $521 million in after-tax net income, up nearly 47% from the $355 million that Tennessee's BlueCross earned in 2020.

"Throughout 2021, we focused on removing barriers to care and supporting members and communities through the COVID-19 pandemic," BlueCross Senior Vice President Dalya Qualls White said in a summary of the 2021 results. "BlueCross paid out a record-high $16.76 billion in claims, including $1.1 billion for COVID-19 testing and treatment."

BlueCross of Tennessee, a nonprofit health insurer that serves more than 3.3 million members, said 88 cents of every premium dollar paid last year went for medical services or drug on behalf of its members. After-tax income for BlueCross was 2.8% of the company's gross revenues, and Qualls said more than half of the company's net income came from investments, rather than operations.

"Unfortunately, rising costs are predicted to continue," said Robin Young, senior vice president of commercial operations and chief marketing officer at BlueCross BlueShield of Tennessee."The Centers for Medicare & Medicaid Services reports that health care costs are expected to rise another 3.6% in 2022."

In a newsletter about health care spending, Young said BlueCross is focused on improving health care "and the communities we serve. That starts with providing affordable access to quality health care, and ensuring we pay our share of your health care costs quickly."

Over its 77-year history, BlueCross has used its earnings to build up reserves of $3.9 billion, which is $1.4 billion more than the $2.5 billion of reserves required by the state.

Michele Johnson, director of the Tennessee Justice Center which advocates for low-income Tennesseans and has urged the state to expand its health care coverage, challenged the record of BlueCross and its excess reserves Johnson said Americans pay more for health care than any nation in the world by far yet its health care outcomes lag behind many other countries.

"We as Tennesseans cannot afford to have one of our largest state contractors be allowed to hoard dollars intended to improve health," she said.

But Quals said such reserves generate investment income for the company each year and help protect the insurer against catastrophic events that might prove more expensive than forecast.

"Our 2021 financial performance allows us to stay strong for our customers, as demonstrated by our A+ Stable rating from Standard and Poor's," Quals said. "Our required reserves would cover our members' claims for 68 days. We have $414 in additional reserves per member, which would cover another 38 days of claims."

- Compiled by Dave Flessner