Improved Profit Margins for Blue Cross & Blue Shield Plans in Third Quarter 2023

January  31, 2024

According to Mark Farrah Associates’ (MFAs) Health Coverage Portal™, as of September 30, 2023, Blue Cross Blue Shield (BCBS or Blues) membership comprised 37% of total U.S. health insurance (Individual plus Employer-based, for all funding types, Medicaid & Medicare) enrollment, or 119.7 million members. BCBS plans with over $18 billion in revenue through the third quarter of 2023 (3Q23) include: Elevance (formerly Anthem), Health Care Service Corp. (HCSC), Guidewell Mutual Holding Group, Independence Blue Cross, and Blue Shield of CA BCBS plans have been health insurance leaders for decades across the U.S. with diversified product portfolios, including commercial, Medicare and Medicaid business, along with specialty benefits.

In this brief, Mark Farrah Associates (MFA) assesses profit margins of the top BCBS plans, comparing year-over-year performance from September 2020 to September 2023, based on the National Association of Insurance Commissioners (NAIC) and the California Department of Managed Health Care (CA DMHC) statutory reporting. Total profit margins for Blues plans (net income divided by total revenues) decreased from 6.1% as of 3Q20 to 3.5% in 3Q21. Total profit margin fell further in 3Q22 to 3.0%, however, increased to 3.5% in 3Q23.

Leading BCBS Profit Margin Performance

• Guidewell Mutual Holding Group experienced a notable drop in profit margins between 3Q20 and 3Q21, from 5% to 1.9%, however, slightly increased its profit margin from 2% in 3Q22 to 2.7% in 3Q23.
   
• Independence Blue Cross Group (IBX), with 54% of its enrollment through Medicaid plans in nine states, experienced a marginal increase in profit margin from 3Q20 to 3Q21, from 1.8% to 2.1%, but decreased to 0.9% in 3Q22. For 3Q23 IBX had a profit margin of 1.2%, which was the lowest reported profit margin amongst leading Blues plans.
   
• Blue Shield of CA had a profit margin of 1.7% for 3Q23, an increase from -2.1% in 3Q22.
   
• Health Care Service Corp (HCSC) reported a profit margin of 3.9% in 3Q23, a slight decrease from 4.6% in 3Q22.
   
• Elevance Health continued to report the largest profit margin for top Blues plans of 4.9% in 3Q23, a decrease from 5.4% in 3Q22. The company experienced a profit margin decline of 1.9 percentage points between 3Q20 and 3Q21.

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Blues plans remain financially strong and continue to gain new members, year-over-year, overall profitability was up through 3Q23. Of the leading Blues plans, Guidewell, IBX and Blue Sheild of California reported improved profit margins, while Elevance and HCSC reported declines. Delving deeper into trend data that is available in MFA’s Health Coverage Portal shows that improved medical expense ratios and increased investment income are two notable factors driving the gain in profitability for the Blues. Full annual results will not be available until spring. As always, Mark Farrah Associates will report on important BCBS plan performance and provide valuable health insurance insights in its future briefs.

About Mark Farrah Associates (MFA)

Mark Farrah Associates (MFA) is a leading data aggregator and publisher providing health plan market data and analysis tools for the healthcare industry. Our product portfolio includes Health Coverage Portal™, County Health Coverage™, Medicare Business Online™, Medicare Benefits Analyzer™, 5500 Employer Health ^PLUS, and Health Plans USA™. For more information about these products, refer to the informational videos and brochures, available under the Our Products section of the website (www.markfarrah.com) or call 724-338-4100.

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