Medical costs for BCBS individual plans outpaced premiums in 2015

Blue Cross Blue Shield (BCBS) plans, which comprise many of the Affordable Care Act exchange policies, paid out more in medical costs than they received in premiums for their individual commercial plans through the first three quarters of 2015, according to the Wall Street Journal.

An analysis by J.P.Morgan indicates that BCBS plans spent $20.7 billion on medical claims during the first three quarters, but took in just $20.4 billion in premiums, a sharp contrast from 2014 earnings in which premiums outpaced medical costs. Insurers typically see a rise in medical claims during the fourth quarter, J.P. Morgan analyst Gary Taylor told the WSJ, which could add to the 11-16 percent overall loss on individual plans through the first three quarters.    

BCBS of Louisiana lost $77 million on individual plans in 2015, $11 million more than the previous year, the article notes. The payer blamed the lack of healthy enrollees within the state exchange, and questioned the long-term viability of insuring individuals with higher-than-expected risks. In January, BCBS of North Carolina projected a loss of more than $400 million on Affordable Care Act policies in 2014 and 2015, forcing the insurer to eliminate sales commissions and halt applications for ACA plans.

A spokesman for Premera Blue Cross told the WSJ that it faced higher expenses from individuals enrolling after the open-enrollment period once they needed medical care. Other analysts indicated insurers didn't have enough information to accurately set premiums, or they set aggressive rates in an effort to gain market share.

Despite reported losses, Kevin Counihan, marketplace CEO for the Centers for Medicare & Medicaid Services, told the WSJ that "the market is getting stronger," thanks to a slew of new enrollees in 2016 ACA plans.

The industry has been on edge after UnitedHealth threatened to pull out of ACA exchanges late last year, and then announced $720 million in losses tied to ACA plans in 2015. However, recent reports indicate that UnitedHealth's exit wouldn't threaten ACA exchanges, but based that reasoning on heightened competition between BCBS-sponsored plans, managed care insurers and provider-sponsored plans.

 To learn more:
- read the WSJ article