ROCHESTER, N.Y. — Excellus BlueCross BlueShield, Central New York’s largest health insurer, reported net income of $182.3 million, on $5.6 billion in premium revenue, in 2017.
The figures were disclosed in an annual financial report that the Rochester–based health insurer filed Wednesday with the New York State Department of Financial Services.
Elizabeth Martin, VP of communications at Excellus, confirmed the net-income figure in an email response to a BJNN inquiry.
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Excellus’ net income rose more than 83 percent from the $99.5 million it reported in 2016, according to BJNN calculations.
The health-insurance carrier generated a “higher net income than expected,” due to lower than anticipated medical expenses, “efficient” administrative expenses and “favorable” investment income, Christopher Booth, CEO of Excellus, explained in a news release.
Investment income, which is a part of net income, amounted to $94 million before taxes, “so not all income is produced by premium revenue,” Excellus noted.
Excellus’ goal is to earn annual net income of “less than two percent of premium” revenue, he added. This year’s net-income figure was 3.2 percent of premium revenue, the highest percentage since 2011.
“Results vary slightly. Some years it is one or two percentage points more than expected offset by other years when the margin is one or two percentage points less than budgeted, but it has averaged 1.8 percent,” he stressed. “Achieving a margin is critical for the business to be financially healthy for the security of our members. New York has recently experienced what occurs when an insurer incurs losses and lacks adequate reserves.”
Booth was referring to the financial collapse of Health Republic Insurance of New York that caused “major disruptions” for consumers, hospitals and physicians in many parts of the state.
Health Republic was one of the Affordable Care Act’s consumer-operated and oriented plans (co-ops), which are private, member-governed health-insurance companies.
In its news release, Excellus also noted that even though it is a nonprofit (meaning it doesn’t pay dividends to stockholders), it paid $418 million in state and federal taxes last year.
Use of net income
Excellus says it places its net income into its reserves to “protect” its members from higher-than-expected claims expenses or lower-than-anticipated revenues.
Health-plan reserves amount to $1.4 billion, or $1,292 per insured member. Relating reserve levels to health-care costs, an average cost to treat a “moderate” health problem in an upstate New York hospital emergency room is $1,479. Excluding Excellus, other nonprofit health plans in upstate New York reported an average of $1,355 in reserves per member as of Sept. 30, 2017 (the latest data available).
Other 2017 details
Excellus’ enrollment from 2017 into January 2018 grew by more than 75,000 members in all three major lines of business, including commercial, Medicaid, and Medicare.
“We’re growing across all lines of business on the basis of price, quality and service,” said Booth.
Excellus paid more than $4.8 billion in medical benefits in 2017, the health insurer said.
Contact Reinhardt at ereinhardt@cnybj.com