Blue Cross and Blue Shield of Minnesota Announces 2015 Financials

EAGAN, Minn., April 1, 2016 /PRNewswire-USNewswire/ -- Blue Cross and Blue Shield of Minnesota and its family of companies (Blue Cross) today announced audited financial results for 2015. Blue Cross ended the year with a net operating loss of $178.1 million on full-year revenues of $10.6 billion, for a negative operating margin of (1.7 percent) and a net loss of $153.5 million.

The results represent a 15 percent increase in total revenue over 2014 and improved operating income and enrollment in nearly every segment. The overall negative operating margin was driven primarily by continued losses in the individual market, with the majority of other lines of business reporting a positive operating performance for the year. In 2015, the ratio of claims-paid to revenue-received exceeded 115 percent for individual plans resulting in an operating loss in excess of $265 million.

"I am pleased to report that our 2015 performance indicates the increasing stability we are seeing across the vast majority of our business," said Michael Guyette, president and CEO of Blue Cross and Blue Shield of Minnesota. "It also adds to our momentum of planning for long-term growth through consumer-focused innovation while maximizing operational capabilities within our central health insurance business. Additionally, now is the right time for us to be investing in the future of health care — for not only our members, but for our communities as well. Moreover, we remain engaged in the individual market in order to help solve what is an ongoing challenge for Minnesotans. Fortunately, our diversified portfolio and financial efficiencies allow us to live out our nonprofit mission and ensure that the company has the right resources to address current issues while planning for the future."

For the year, Blue Cross increased payment of medical claims on behalf of members from $9.1 billion in 2014 to more than $9.7 billion, representing 91 cents of every premium dollar going directly to cover health care costs. Blue Cross paid more than $136 million in taxes, assessments and surcharges. Additionally, Blue Cross enrollment grew to 2.75 million members at the end of 2015.

Operating losses were also influenced by planned administrative expenses related to a new operating model platform.  Blue Cross anticipates ongoing administrative expenses associated with the migration to the new platform through the 2018 filing year.

"During 2015, with the exception of our individual segment, all of our core product lines in both the commercial and government market solution segments were appropriately positioned as financially self-sustaining businesses," said Jay Matushak, senior vice president and CFO of Blue Cross and Blue Shield of Minnesota. "Additionally, we are in the middle of an important technology platform migration that is providing essential enhancements for our operational capabilities. This investment drove a material increase in our administrative expenses, which resulted in a corresponding degradation to our earnings. This earnings degradation was planned and anticipated primarily due to our thoughtful and deliberate approach to ensure that our members were not encumbered with premium increases to fund this investment."

Audited results include the consolidated financial statements for businesses operating under Aware Integrated Inc. (AII), a nonprofit corporation and parent organization. AII serves as the holding company for all affiliates and subsidiaries, including the following regulated businesses associated with Blue Cross:

Blue Cross and Blue Shield of Minnesota — A nonprofit health insurance company and independent licensee of the Blue Cross and Blue Shield Association.

Blue Plus — A nonprofit HMO that offers health plans and contracted provider networks throughout Minnesota to individuals and local, state and national groups.

SelectAccount — A third-party administrator of medical spending accounts included in consumer-directed health plans throughout the country.

Blue Cross provides all information, reports and audited details as required by the State of Minnesota for both commercial and public program products. Detailed financial statements for the organization's regulated businesses are filed with the Minnesota Department of Commerce. A consolidated earnings statement for 2015 results is available at https://www.bluecrossmn.com/2015Results.

Blue Cross and Blue Shield of Minnesota, with headquarters in the St. Paul suburb of Eagan, was chartered in 1933 as Minnesota's first health plan and continues to carry out its charter mission today as a health company: to promote a wider, more economical and timely availability of health services for the people of Minnesota. Blue Cross is a not-for-profit, taxable organization. Blue Cross and Blue Shield of Minnesota is an independent licensee of the Blue Cross and Blue Shield Association, headquartered in Chicago. Go to bluecrossmn.com to learn more about Blue Cross and Blue Shield of Minnesota.

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SOURCE Blue Cross and Blue Shield of Minnesota

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