Top Blue Cross Blue Shield Plans Show Improved Profit Margins for Third Quarter 2018

January 23, 2019

Blue Cross Blue Shield affiliated insurers account for approximately 48% of the Commercial health insurance segment and just over 40% of total health enrollment countrywide.  In the health insurance industry, market share does not always lead to profitability and financial stability.  For this brief, Mark Farrah Associates (MFA) assessed the profitability of Blue Cross Blue Shield (BCBS) plans, comparing year-over-year performance as of September 30, 2018.

Based on data from the National Association of Insurance Commissioners (NAIC) and the California Department of Managed Health Care (CA DMHC) statutory reporting, BCBS plans with over $10 billion in revenue at third quarter 2018 include Anthem, Health Care Service Corp. (HCSC), Blue Shield of CA, BCBS of Michigan Group, Guidewell Mutual Holding Group, Independence Blue Cross (IBX), and Highmark.  These industry leaders reported positive, and in most cases, improved profitability between 3Q17 and 3Q18. 

• BCBS of Michigan’s profit margin increased nearly 3% from 5.43% in 3Q17 to 8.31% in 3Q18 due to premium growth that outpaced the increase in medical expenses and an income tax credit taken in 2018. 
• Guidewell’s profit margin grew to 5.33% from 4.71% in September of 2017, primarily due to increased premium revenue, which outpaced the growth of expenses.
• Independence Blue Cross (IBX) reported the largest improvement with a profit margin of 2.29% as of September 30, 2018, up from 0.30% in September of 2017 due in part to increased premium revenue and reduced medical costs per member.
• Blue Shield of CA increased its profit margin to 3.36% from 2.81% due in part to lower medical costs per member.
• Health Care Service Corp (HCSC) reported the largest profit margin of 14.21% for 3Q18, up from 6.10% in 3Q17 due to an increase in premium revenue and a large income tax credit.
• Highmark’s profit margin of 6.62% in 3Q18 fell slightly from 7.11% in 3Q17 due in part to increased administrative spending. 
• Anthem’s 3Q18 profit margin of 5.66% improved from 4.52% a year ago due in part to a combination of slightly lower medical expenses and higher premium revenue per member.

Although this analysis shows mostly improved profitability for leading Blue Cross Blue Shield affiliated insurers, annual financial results will not be available until this spring.  Blue Cross Blue Shield plans continue to be health insurance leaders.  According to MFA’s Health Coverage Portal™, as of September 30, 2018, BCBS membership comprised 48% of total U.S. commercial enrollment, or nearly 93 million members.  Mark Farrah Associates will continue to report on important BCBS plan performance and provide valuable insights on the health insurance industry.

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™, 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.

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