Home » FOCUS » Blue Cross & Blue Shield ends up in the black for 1997
Company overcomes record losses of 1996

Blue Cross & Blue Shield ends up in the black for 1997

Blue Cross & Blue Shield of Mississippi has overcome record losses of $7.5 million in 1996 to finish 1997 in the black, showing a net income of $174,000.

In 1997 Blue Cross & Blue Shield’s net subscription revenue was $436 million. Subscriber benefit costs were $405 million. Net operating expenses totalled $46.5 million, and the company received investment and other income totalling $16.7 million.

Blue Cross & Blue Shield of Mississippi spokesman Chris Clarke said that the company, the largest health insurance provider in the state, did better in 1997 than was originally projected.

“As was the case in 1996, we continue to experience what has been part of a national trend of underwriting losses,” Clarke said “Contributing factors include health care cost trends, increased utilization, and the financial impact of federal and state health care legislation.”

Blue Cross & Blue Shield of Mississippi has taken a number of measures in the past two years to keep the company viable. Clarke said those measures include more favorable pricing with health care providers, changes in product design and rate adjustments.

The outlook for 1998 may be brighter.

“Early indications for 1998 are that the national trend is beginning to moderate,” Clarke said. “That, combined with measures we have taken to date, should translate to an improved financial picture for our company in the year ahead.”

Mississippi Insurance Commissioner George Dale said the whole issue of health care is very volatile. “Just this week we have been notified by Pan American Insurance Company that they are going to discontinue writing health insurance in Mississippi,” Dale said. “This puts more pressure on companies like Blue Cross that specialize in writing health insurance. And if they are the major player, and they are in this field, they’ve got to be maintained as a financially viable source. And, unfortunately, sometimes the only way that can be done is by rate increases. Blue Cross went for about two-and-a-half years in 1991 with a limited number of rate increases, but since that time they have had rate increases on some forms of insurance that they offer each year.”

Like health insurance companies nationwide, Blue Cross & Blue Shield of Mississippi is trying to use managed care to encourage preventive medicine that might be more expensive up front, but could result in large cost savings by preventing more serious illnesses later on.

Dale said the report on managed care is inconclusive.

“I think they are attempting to do some things to try to hold down the costs of health care,” Dale said. “I think it is too early at this point in time to know how successful these things will be. I think the way society looks at health insurance is going to have to be changed. We look at it now that we pay a premium for coverage, so lets make sure that we use it. Many times we use health insurance when some type of preventive medicine would be much better. The original purpose of managed care, HMOs in particular, was to emphasize preventive care, but I’m not sure that has happened.”

Dale said that Blue Cross & Blue Shield of Mississippi is more financially viable than Blue Cross organizations in some other states. It is important providers like Blue Cross be kept financially viable so that insurance is available, he said.

“Our job’s responsibility is to see that they are financially sound even though sometimes we have been criticized for granting rate increases,” Dale said. “But we felt it was best interest of policy holders that Blue Cross & Blue Shield be financially sound.”

About Becky Gillette

Leave a Reply

Your email address will not be published. Required fields are marked *

*