The bottom line: We reported over the summer that the Blues, which have the most exposure to the Affordable Care Act marketplaces, are making a lot of money despite the Trump administration’s threats and actions against the ACA. Why are profits still growing for the Blues? They raised premiums a lot, people are not going to the doctor or hospital as much, and the federal government modified some enrollment policies to the benefit of insurers.
The details: Fitch analyzed the first-half financial documents of 34 Blue Cross Blue Shield companies, including the publicly traded Anthem as well as other large Blues brands such as Health Care Service Corp. and Blue Shield of California. Almost every company improved its finances year over year, leading to the following aggregate financial data for the first six months of 2017:
- $135 billion of revenue (up 7%)
- $7.7 billion underwriting profit, or the amount of money made after subtracting medical costs from premiums paid (up 194%)
- $6.5 billion net profit (up 441%)
- 85.9% medical loss ratio, which reflects how much of the premium dollar is spent on medical care (down 0.8 percentage points)
What was true previously is still true now: Most health insurers are not currently losing their shirts on the ACA’s individual marketplaces, although next year could be different depending on what happens to the law’s cost-sharing subsidies. While the higher premium rates have not harmed people who get federal subsidies, they have caused more financial pain for middle-class people who have to pay the full cost of their health insurance.
Looking ahead: Congress delayed the ACA’s health insurer tax throughout 2017 — another reason why companies have done so much better this year. Insurers have conducted a lobbying blitz to get Congress to repeal or delay that fee again, and legislation that would delay the tax for another two years could be folded into a year-end package.