Blue Cross' Chicago-based parent company just lost $1.5 billion thanks to the Affordable Care Act.
Health Care Services Corp., the Chicago-based parent company of Blue Cross and Blue Shield, just took a $1.5 billion year hit in the second year of Obamacare.
HCSC owns Blue Cross affiliates in Illinois and four other states, and financial losses for the company have been mounting ever since the Affordable Care Act was passed — and it’s only gotten worse in 2015, according to a Chicago Tribune report.
HCSC reported it lost $1.5 billion in individual business, double the $767 million it lost in 2014, the first year of the ACA’s state exchanges that individuals use to get coverage.
HCSC set aside $400 million in 2014 in anticipation of losing money, bringing the total reserves of the company to $680.9 million — nearly all of which it spent to cover medical expenses associated with ACA plans in 2015, according to the report.
It’s a bad sign for insurers struggling to make profits under Obamacare. While the ACA has expanded insurance coverage, bringing new customers through expanding Medicaid and adding tax credits to subsidize the insurance, much of the new growth has been unprofitable as medical expenses have been higher than expected, and there’s been a number of regulatory challenges and shortfalls in federal risk-sharing programs, indicating more work will need to be done for insurers to adjust to the changing financial landscape.
Meanwhile, HHS.gov released a statement yesterday announcing that the Health Insurance Marketplaces nationwide had signed up 4.9 million new customers for 2016 coverage during the latest open enrollment period, bringing the total to 12.7 million people who will have 2016 coverage through the ACA.