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Thursday, January 27, 2022

Profit Margin Changes for Leading Blue Cross Blue Shield Plans


January 27, 2022


Blue Cross Blue Shield (BCBS or Blues) 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. According to Mark Farrah Associates’ Health Coverage Portal™, as of September 30, 2021, BCBS membership comprised 49% of total U.S. commercial (Individual plus Employer-based, for all funding types) enrollment, or over 95 million members. BCBS plans with over $15 billion in revenue through the third quarter of 2021 (3Q21) include: Anthem, Health Care Service Corp. (HCSC), Independence Blue Cross, Guidewell Mutual Holding Group, and Blue Shield of CA. 

Prior to the Covid-19 pandemic, Total Blues plans’ profit margins (net income divided by total revenues) declined from 6.4% to 5.9%, based on cumulative results through September 30, 2018, and 2019, respectively. Profit margin results, through 3Q21 of 4%, imply that downward trend is continuing, based upon available statutory reporting. All the leading Blues plans’ data indicate profit margins declined between 3Q18 and 3Q21, however their respective journeys during that period were quite dissimilar. In this edition of Healthcare Business Strategy, Mark Farrah Associates (MFA) assesses profit margins of the top BCBS plans, comparing year-over-year performance from September 2018 to September 2021, based on the National Association of Insurance Commissioners (NAIC) and the California Department of Managed Health Care (CA DMHC) statutory reporting.



  • Anthem Inc., which reports health plan enrollment in 28 states, experienced combined profit margin increases between 3Q18 and 3Q19, declines in 3Q20 and increases, again, in 3Q21.
  • Health Care Service Corp (HCSC) reported health plan enrollment in 19 states. It experienced the most dramatic variations in profit margins. The combined corporation reported the largest profit margin for top Blues plans of 13.8% in 3Q20. This was due to the recognition of the net premium impact of the recovered risk corridor payment, an amount totaling over $1.8 billion (over 5% of total revenue), as premium for the nine months ended September 30, 2020. HCSC had not previously accrued any amounts, regarding its lawsuit in the U.S. Federal Court of Claims against the U.S. Department of Health and Human Services (HHS) and CMS, due the Corporation for the 2014 -2016 benefit years.
  • Independence BC, with more than 50% of its enrollment through Medicaid plans in eight states, experienced consistent margins over the four-year period, showing slight increases in profit margin each year from 3Q19 to 3Q21.
  • Guidewell, Florida Blues, had the lowest profit margin, among leading Blues plans of 1.9% in 3Q21, down significantly from 7.7% in 3Q19. This is driven by medical loss ratio (hospital and medical expenses divided by total revenues) shifts from of 79.9%, in 3Q19, to 86.7% in 3Q21.
  • Blue Shield of CA had a similar profit margin trajectory to that of Guidewell.

Overall, for 2021, it appears that Blues plans’ profitability is continuing its downward trend which began in 2018. Delving deeper into administrative and medical cost trends and returns on investments (ROIs), data that is available in MFA’s Health Coverage Portal, show increased spending on hospital and medical expense is primarily driving the declines in profitability for the Blues. Full annual results will not be available until spring. Despite the declines in profit margins, Blues plans remain financially strong, and gaining new members, year-over-year. 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™, 5500 Employer Health Plus, Medicare Business Online™, Medicare Benefits Analyzer™, 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 or call 724-338-4100.

Healthcare Business Strategy is a FREE monthly brief that presents analysis of important issues and developments affecting healthcare business today. If you would like to be added to our email distribution list, please submit your email to the "Subscribe to MFA Briefs" section at the bottom of this page.

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