Blues report shaky financials for 2008

It seems 2008 wasn't a great year for BlueCross BlueShield affiliated health plans, according to a new report based on data from state regulators. The non-profit Blue plans saw average overall profit margin fall from 4.3 percent in 2007 to 2 percent in 2008, according to an analysis of the data by Goldman Sachs investment analyst Matthew Borsch.

Not only did the average margin drop for many plans, a fair number reported losses, including Blue Cross Blue Shield of Michigan, which dropped $144.9 million in the red for '08. These grim numbers were driven partly by higher unemployment numbers--which depressed the number of people available to be insured--as well as losses on investments.

While this isn't good news for any health insurance firm, it's particularly hard for non-profits to bounce back from a year like 2008, researchers say. Typically, they note, non-profit plans like the Blues usually have few lines of additional business to bolster their bottom line, while for-profit plans may operate pharmacy, claims analysis or research subsidiaries.

Unlike other businesses, health plans can't necessarily solve the problem by a prompt price hike. Instead, industry consultants are advising them to make small changes in varied areas, such as getting tougher in provider contracting negotiations and tweaking products to improve profitability.

To learn more about this trend:
- read this American Medical News piece

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