FL Blue Makes a Killing in ACA

Jun 16, 2016

  1. Yagents
    Offline

    Yagents Guru

    Posts:
    10,452
    Likes Received:
    413
    State:
    Arizona
    In 2015, they were higher priced than competition. 2016 was a different story.

    http://www.modernhealthcare.com/art...ntent=20160615-NEWS-160619946&utm_campaign=am


    Florida Blues collected $471 million profit on ACA plans in 2015
    By Bob Herman | June 15, 2016
    The Affordable Care Act's exchanges have not been a bust for every health insurer. Florida's Blue Cross and Blue Shield affiliate made a profit of almost a half-billion dollars on the ACA's new individual plans last year.

    The substantial ACA exchange losses exhibited by large health insurers—such as Health Care Service Corp., Highmark, Humana and UnitedHealth Group—have emboldened the law's critics and worried investors about whether the new marketplaces will ever achieve sustainability.

    Yet many other companies, including Medicaid insurers Centene Corp. and Molina Healthcare and now Florida Blue, have had no difficulties making money on the new ACA plans, which often have narrow networks of hospitals and doctors as well as high deductibles.

    The Florida Blues recorded a $471 million gross profit on ACA-compliant individual plans in 2015, compared with a $124 million gross profit from those policies in 2014, according to the insurer's financial filings. Those figures represent the underwriting profit and don't subtract the administrative expenses associated with those plans. The Florida Blues enrolled approximately 500,000 people in ACA plans by the end of 2015.

    The ACA's medical-loss ratio requires insurers spend at least 80% of premiums on medical care, and a maximum of 20% can be spent on administrative functions, salaries and other operating expenses. Florida Blue's $471 million profit last year represented 17% of the premiums collected.

    More than 90% of Floridians receive premium tax credits that reduce the cost of monthly coverage, and another 70% qualify for cost-sharing reductions that lower their copays and deductibles—meaning a lot of Florida Blue's profit comes in the form of federal subsidies.

    In a statement, a Florida Blue spokesman said the insurer's ACA marketplace success could be attributed to its retail centers, which provide one-on-one enrollment help, and its high-deductible plans. The financial filings indicate increased premium revenue and money from the ACA's risk adjustment program helped boost its individual business. Risk adjustment has been a sore spot for many smaller insurers that argue bigger legacy insurers are disproportionately benefiting from the program.

    Despite the massive surplus for Florida Blue, which sells individual plans in a competitive ACA exchange, the insurer is requesting somewhat high premium rate increases for 2017, although its requests fall well below the higher proposals of other insurers. The Florida Blues asked for rate hikes of 9.8% for individual plans and 8.7% for small-group plans that have the broadest provider networks. Rate hikes for the insurer's HMO network products range from 9.5% to 16.5%.

    The average rate request of the most common silver-level ACA plans will go up by 10% next year, according to a new analysis by the Kaiser Family Foundation. Insurance regulators usually approve smaller rate bumps.

    ACA plans limit out-of-pocket spending and provide several types of preventive care for free, welcome protections for many Americans. But premiums and deductibles have been viewed by many consumers and families as difficult to afford, especially if they don't receive subsidies and are paying full freight.
     
    Yagents, Jun 16, 2016
    #1
  2. leevena
    Offline

    leevena Guru

    Posts:
    1,239
    Likes Received:
    150
    Am I missing something here? First the article states the profit amount is $471 million then says that "profit" is before expenses? Then states the amount represents 17% of expenses. If that is correct the true profit is closer to $0.
     
    leevena, Jun 16, 2016
    #2
  3. Tkruger
    Offline

    Tkruger Guru

    Posts:
    1,191
    Likes Received:
    1
    State:
    Florida
    17% of the premiums collected.

    Big difference.

    Based on my read of this it would seem total premiums generated were somewhere around $ 2,777,000,000 divy that up between the noted 500,000 consumers covered that amounts to an average of $ 5,554 per year or $ 460 premium per month. Basically, $ 2,304,910,000 in claims for the 2015 or $ 4,609.82 per enrollee.
     
    Tkruger, Jun 16, 2016
    #3
  4. FLM2
    Offline

    FLM2 Guru

    Posts:
    3,224
    Likes Received:
    9
    Exactly correct, after subtracting the expected 20% (consistent with MLR requirements) they would have a loss so it's more likely their non-claims expenses are in the 17% range and they are at break even-they are a non-profit anyway so it doesn't much matter.

    How these writers stay employed, though, is beyond me. Publishing an article as potentially inflammatory as this is very, very stupid.
     
    FLM2, Jun 16, 2016
    #4
  5. Tkruger
    Offline

    Tkruger Guru

    Posts:
    1,191
    Likes Received:
    1
    State:
    Florida
    At the risk of being flamed out here, I'm not following either of you.

    it stated that the 471 was 17% of the premiums collected. That falls below the max of the 20% ACA MLR.

    What's wrong with the numbers outlined in my earlier post?

    Based on the info in the article that break out seems pretty close to being accurate.

    Again, asking to be better informed if I am missing something.
     
    Tkruger, Jun 16, 2016
    #5
  6. leevena
    Offline

    leevena Guru

    Posts:
    1,239
    Likes Received:
    150
    Article states that profit was $471 million. Also states that the expenses for bcbs have not been accounted for. Profit is money left over after you subtract out the expenses from the $471 million.
     
    leevena, Jun 16, 2016
    #6
  7. Tkruger
    Offline

    Tkruger Guru

    Posts:
    1,191
    Likes Received:
    1
    State:
    Florida
    While the article is poorly written I agree, that number makes no sense. A gross profit of 471 it clearly states that that number accounts for 17% of premiums taken in. Meaning 83% was paid for claims. The 17% is the allowable per ACA MLR...spent on administrative functions, salaries and other operating expenses.

    NET NET Profit should still be + since the government knows that all you need capital wise is 20% of your Gross sales to cover the operation.

    What am I missing?
     
    Last edited: Jun 16, 2016
    Tkruger, Jun 16, 2016
    #7
  8. leevena
    Offline

    leevena Guru

    Posts:
    1,239
    Likes Received:
    150
    I am doing math on the cuff, but assume 2 billion in premium, after you subtract the expenses the real profit is about 70 million. Now 70 million sounds like a large sum, but that is from 500,000 members. So profit is $10 per member per month. Not that significant of a number.
     
    leevena, Jun 16, 2016
    #8
  9. Tkruger
    Offline

    Tkruger Guru

    Posts:
    1,191
    Likes Received:
    1
    State:
    Florida
    Sounds like the comp breakout to their agents.

    I get that may not seem like allot of money but it's a whole different story then the UHC 500 Billion loss being reported.
     
    Tkruger, Jun 16, 2016
    #9
  10. kgmom219
    Offline

    kgmom219 What's Next?

    Posts:
    5,417
    Likes Received:
    491
    State:
    Texas
    Irregardless of the numbers...

    WHY are they tooting their own horn on this? It reads like a press release. FL Blue is non-profit, there isn't a stock price to manipulate.

    Get more money from HCSC (who is taking beating in ACA) and has been trying to get Florida for years?

    They are making the move from non-profit to Profit and a public company?

    Obama sent them a bonus for some good press?

    There's a reason this thing was sent out. That's more important to me than if its a Billion, Million or $10PMPM
     
Loading...