Blue Cross and Blue Shield of Minnesota Announces 2017 Financials
EAGAN, Minn., April 3, 2018 /PRNewswire/ -- The Blue Cross and Blue Shield of Minnesota family of companies today announced audited financial results for 2017. The organization ended the year with a net operating loss of $62.7 million on full-year revenues of $12.5 billion, for a negative operating margin of 0.5% and a pre-tax net gain of $148.3 million. For the year, $11.2 billion of medical claim payments were incurred which represented 90 cents of every premium dollar going directly to cover health care costs. Additionally, Blue Cross paid more than $67 million in taxes, assessments and surcharges. Total member enrollment remained flat at 2.9 million members.
Audited results include the consolidated financial statements for businesses operating under Aware Integrated Inc. (AII), a nonprofit corporation and parent organization. Results for 2017 represent a combined $230 million improvement in operating income for the two core companies that offer health plans and networks throughout Minnesota (Blue Cross and the health maintenance organization Blue Plus); and a $50 million increase in investment income over 2016.
"We experienced meaningful improvement in operating performance and earnings in 2017," said Jay Matushak, senior vice president and chief financial officer of Blue Cross and Blue Shield of Minnesota. "Excluding the planned and temporary expenses being incurred in our multi-year transition to a more robust health administration and technology platform, the underlying core business generated positive operating earnings. We believe we are currently well positioned in our commercial and government businesses."
The overall results of the Blue Plus HMO continue to be driven by the administration of state public health programs, which accounted for 87 percent of annual revenue. Both Prepaid Medical Assistance Program (PMAP), the state Medicaid program - and MinnesotaCare, the health program for low-income families - saw significant reductions in operational losses compared to 2016. Overall, Blue Plus reported an operating gain of $9.3 million on revenues of $2.4 billion for an operating margin of 0.4%. The reported net gain of $32.2 million for Blue Plus reflects investment income and capital gains on Blue Plus' specific portfolio of securities.
The performance of individual commercial products available through Blue Plus demonstrated early signs of stabilization for the year by generating positive operating results of $52 million on $298 million in revenue. This marks the first year of positive financial performance in the individual product segment following three consecutive years of losses incurred by Blue Cross that totaled more than $500 million.
The lines of business served by Blue Cross, which include small and large employers; and enrollees in Platinum BlueSM (Medicare Cost); and MedicareBlue SM Rx (Medicare Part D) had fully insured premium revenues of approximately $3.7 billion and an operating loss of $31.4 million - representing an operational improvement of more than $115 million compared to 2016.
"2017 was an important year to stabilize our commercial and government health business to establish the path for future growth and start 2018 with positive momentum," said Cain A. Hayes, president and chief operating officer of Blue Cross and Blue Shield of Minnesota's Health Business. "Our financial performance exceeded projections, which places us in a strong position to continue advancing our mission and ensuring that we have the right capabilities and products in place to meet the long-term needs of our customers."
In addition to these financial results, Blue Cross achieved several milestones in 2017, including:
- Achieved a 5-Star rating out of five stars from the Centers for Medicare & Medicaid Services on the Platinum BlueSM Medicare Cost plan and a 4.5-Star rating out of five stars on the SecureBlueSM Minnesota Senior Health Option plan. Blue Cross' Platinum Blue plan is the only medical and drug coverage plan in Minnesota to receive a 5-Star rating for 2018.
- Surpassed more than 40,000 enrollments through Access to Coverage, a program designed and supported through the Blue Cross and Blue Shield of Minnesota Foundation that helps eligible Minnesotans sign up for public health programs.
- Accelerated the growth of Further SM (formerly SelectAccount®), the company's medical spending account administration business, which surpassed $1 billion in assets under management.
- Expanded the Stella brand from diversified portfolio offerings to the consumer-facing name for the parent organization. Designed to reflect the changing ways people think about total health, Stella now represents the organization's core insurance capabilities and a full spectrum of innovative solutions and services ready to serve people across the country.
AII serves as the holding company for all affiliates and subsidiaries, including the following regulated businesses associated with Blue Cross:
Blue Cross and Blue Shield of Minnesota -- A nonprofit health services company and independent licensee of the Blue Cross and Blue Shield Association.
Blue Plus® -- A nonprofit HMO and independent licensee of the Blue Cross and Blue Shield Association that offers health plans and contracted provider networks throughout Minnesota to individuals and local, state and national groups.
FurtherSM (formerly SelectAccount®)-- A third-party administrator of medical spending accounts included in consumer-directed health plans throughout the country.
Blue Cross provides all information, reports and audited details as required by the State of Minnesota for both commercial and public program products. Detailed financial statements for the organization's regulated businesses are filed with the Minnesota Department of Commerce. A consolidated earnings statement for 2016 results is available at https://www.bluecrossmn.com/2016Results.
MII Life Insurance, Inc., d/b/a FurtherSM
About Blue Cross and Blue Shield of Minnesota
Blue Cross and Blue Shield of Minnesota, with headquarters in the St. Paul suburb of Eagan, was chartered in 1933 as Minnesota's first health plan and continues to carry out its charter mission today: to promote a wider, more economical and timely availability of health services for the people of Minnesota. A nonprofit, taxable organization, Blue Cross is the largest health plan based in Minnesota, covering 2.9 million members in Minnesota and nationally through its health plans or plans administered by its affiliated companies. Blue Cross and Blue Shield of Minnesota is an independent licensee of the Blue Cross and Blue Shield Association, headquartered in Chicago. Go to bluecrossmn.com to learn more.