Blue Cross Blue Shield (BCBS) is enjoying its status as the lone health insurance provider on the Obamacare exchanges in many states, notching marked profits in the first quarter of 2017.
Firms turned a net profit in the first three months of 2017 in states where BCBS or one of its affiliates is the only insurer providing plans on the Obamacare exchanges, Axios reports. This is a huge turnaround from the first quarter of 2016, when Aetna, Anthem, Humana, UnitedHealth Care and other providers incurred substantial profit losses from participating in the exchanges.
BCBS’s success is important since nearly every major health insurance provider is either opting out of the Obamacare exchanges entirely, or drastically reducing its exposure in 2018. (RELATED: Insurance Companies Ditching Obamacare Follow A Similar Pattern)
The company is currently the only insurance provider offering plans on Obamacare exchanges in five states, including: Alabama, Alaska, Oklahoma, South Carolina and Wyoming. BCBS had realized profits in each of these states in the first quarter of 2017, and did not lose money in the Obamacare marketplace.
Being the sole Obamacare insurer in these states puts BCBS in an interesting position.
As the only option for low to moderate income individuals to obtain health insurance in those states, There is a great deal of money to be made from individuals who purchase plans and the federal government in the form of Obamacare subsidy payments.
On the other hand, BCBS has to accept every person who applies for an insurance plan on the exchanges, which includes high-risk, high-cost patients. Another potential unknown for the company, and all insurers currently offering plans on the exchanges, is whether or not the Trump administration will continue paying out Obamacare subsidies past September 2017. (RELATED: 3 Events That Could Rattle Obamacare Reform)
There are also a few factors that could contribute to BCBS’s stellar first quarter showing on the exchanges. The first is that fewer people seek medical treatment in the first few months of the year because deductibles are reset, leaving consumers with higher out-of-pocket costs. Consumers typically choose to wait to see a doctor until they’ve met at least a portion of their deductibles.
Another factor to consider is insurance companies have raised premiums substantially over the past few years to cover profit losses and hedge against future uncertainty. While this has helped fill the coffers of insurance providers, it has worked to upset consumers who get Obamacare subsidies or insurance through their providers.
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