The parent company of some of the country's largest Blues plans appears to be shoring up cash reserves for what may one of the most unpredictable years in its history.
Health Care Services Corporation increased its total adjusted capital by about $700 million between 2012 and 2013, to $10.2 billion, the company disclosed in its 2013 filing with the National Association of Insurance Commissioners.
HCSC, the parent company of Blue Cross Blue Shield of Illinois, Blue Cross Blue Shield of Illinois of Texas and other Blues, increased its premium deficiency reserve last year to $283 million -- up substantially from $34 million in 2012 and $22 million in 2011.
A good deal of that reserve may been drawn from what would have gone to HCSC's net income, amid uncertainty over the financial impact of new membership in public insurance exchange.
The mutual insurer posted profits of $648 million in 2013, down from more than $1 billion in 2012 and the first time in four years that the company has earned less than $1 billion. In 2009, amid the Great Recession, HCSC earned just $514 million.
HCSC companies are selling a lot of public exchange plans in two large states in particular.
In Texas, HCSC's BCBS of Texas is is selling more than half of the individual health plans available in areas across the state through the federal HIX. Likewise for Blue Cross and Blue Shield of Montana and Blue Cross and Blue Shield of Oklahoma.
In Illinois BCBS IL is selling almost one third of all the available individual plans in the federal-state partnership HIX. In New Mexico, where the state and federal government are also jointly running the exchange, it's not clear how many plans BCBS of New Mexico is offering, but its one of four insurers vying for new members, including a federally funded co-op plan.
HCSC's revenue did increase a fair amount in 2013, to $22.6 billion, compared to $20.65 billion in 2012. Fully-insured membership also grew, by about half a million to 8.5 million, up from 8 million in 2012.
Consequently, the company was also spending more on claims from members. In 2013, HCSC devoted $19.2 billion to medical and hospital claims, $700 million to claims adjudication and $1.6 billion to administration. That compares to $17.4 billion spent on claims in 2012, with $672 million spent on adjudication and $1.4 billion on administration.
The company also saw a new acquisition and some new contracts last year. In November, HCSC's Blue Cross Blue Shield of New Mexico announced an acquisition (still to be approved) of Lovelace Health Plan from the Lovelace Health System, which would grow BCBSNM's membership by about one third to about 388,000, largely in the greater Albuquerque market.
In January 2013, HCSC started offering Medicare Advantage and Medicare Part drug plans, and both BCBSIL and BCBSNM are starting a Medicare-Medicaid dual eligibles contract this spring.
HCSC also finds its cash flow being impacted through BCBS IL's Illinois state employee health plan contract. The company has an outstanding payment due from the Illinois government with a premium receivable balance that as of the end of December stood at $261 million, accounting for about 10 months of premiums.