Fitch Ratings says it expects the 2015 earnings for the Blue Cross and Blue Shield companies to drop, as 23 of 35 of the company’s affiliates reported a cumulative $1.9 billion decline in the first nine months of the year.
Blue Cross Blue Shield of Texas is a division of the Health Care Service Corporation, the Chicago-based largest member-owned health insurer in the country. And the HCSC posted a $442 million loss, Fitch reported. That’s the second highest of all the Blue Cross affiliates, lagging behind only Blue Cross of Michigan (which lost $622 million).
In 2014, Blue Cross Blue Shield of Texas paid out $400 million more in claims than it brought in via premiums. In response, it stopped offering the broad PPO plans in the federal exchange marketplace. But that was only occurred in the last enrollment period, which occupied the final quarter of 2015. While Fitch acknowledges than 2015 was another rough year for the brand, it notes that it expects 2016 earnings to increase because of its strategic shifts.
“Earnings declines, lower enrollment and moderate revenue growth were challenges for the Blue Cross and Blue Shield companies, however, Fitch believes earnings are likely to improve in 2016 due to premium rate increases and benefit redesign aimed at improving underwriting results and regulatory changes,” said Mark Rouck, the senior director.
We’ll have more on this later in the week.