The media are quick to highlight the huge financial losses of health insurers participating on the health exchanges. Yes, health insurers have found it difficult to turn a profit in their health insurance exchange lines of business. However not all carriers are feeling the heat of the losses. In fact, Florida’s largest health insurer–Blue Cross Blue Shield of Florida, or “Florida Blue”–posted a $471 million profit in 2015.
This will be the second year Florida Blue will post a profit for Florida exchange plans. The health insurer’s financial filings show that the carrier posted a $124 million profit in 2014. As Aetna and United Healthcare leave the Florida health exchange, Blue Cross stands in line to acquire potentially hundreds of thousands of new clients in 2017.
Why Did Florida Blue Profit Two Years in a Row?
Florida Blue always had a plan in place.
The health insurer anticipated that many signing up for its ACA plans might be sickly. Insurance companies do not make money of sick clients, thus it made some changes to prevent costly clients on its payroll.
Florida Blue assigned each new Obamacare enrollee a care manager. Florida Blue designated a nurse to each new enrollee to make sure the enrollee was seeking care to prevent more expensive claims further down the road.
In addition, Florida Blue offers on-the-spot free health screenings at one of it’s many retail clinics all across the state. Those who visit the centers have the option to have blood pressure, blood glucose, or cholesterol screenings. Or all of them.
The exchange business hit insurers hard as many rules allowed sicker people to sign up. Fearing the worst, Blue Cross Blue Shield of Florida made efforts to stay true to the proverb which says, “an ounce of prevention is worth a pound of cure.”
The company ensured that its new clientele maintained their health up front.
Florida Blue Invested Heavily in Retail Centers
It is not hard to find a place to buy car insurance. If ever one is in the market, a retail shop is never far in order to start the buying process. Driving down a busy thoroughfare in most cities in the United States will prove that the options are seemingly endless for car insurance. State Farm, Nationwide, Allstate all appear in clusters close to their competition.
But when has it ever been this easy to buy health insurance?
Drive down the same thoroughfare in the United States, and one won’t see a retail shop dedicated to selling health insurance. United Healthcare, Humana, and Aetna logos do not generally emblazon the storefronts of strip malls. Finding a professional out in the community to help with health insurance is harder than finding a professional to consult on car insurance.
Florida Blue saw this pain in the market, and it opened up 20 retail centers in the State of Florida. Those actively seeking health insurance could visit one of these centers and find a plan to fit their needs through the guidance of a professional. It became easier than ever to seek out professional help in the community.
Florida Blue says that over 400,000 residents of Florida visited its retail centers in the first three years of the Affordable Care Act.
Slim Networks Contributed to Florida Blue’s Success
Some Blue Cross affiliates profited from the ACA exchanges while others failed.
In a recent article from Modern Healthcare, author Bob Herman attributes the financial health of some Blues to limiting provider networks.
Health Care Service Corporation–the owner of Blue Cross plans in Montana, New Mexico, Oklahoma and Texas–previously offered PPO health plans. These are the health plans that offer the broadest network of doctors and other healthcare professionals. Since 2014, Health Care Service Corporation totals their ACA losses at close to $3 billion. HCSC has since eliminated PPO plans from its marketplace offerings.
Blue Cross Blue Shield of Tennessee was not the only PPO offering in Tennessee, but the insurer did provide PPO plans statewide in 2016. The company posted an underwriting loss of $195.7 million in 2015. Citing unsurmountable losses, the health insurer pulled individual health plans from 3 of its biggest markets–Nashville, Knoxville and Memphis.
Florida Blue did not suffer the same fate of HCSC and Blue Cross Blue Shield of Tennessee. The Florida Blue CEO predicted the sustainablilty challenge in creating broad networks with low rates:
He said, “if you don’t get your price close right out of the gate, you’re fighting an uphill battle, and you saw that in a lot of states.”
Philip Strang is a licensed health insurance agent working for American Exchange. He divides his time between health insurance enrollments and writing articles on the Affordable Care Act.