Blue Cross Revenue Drops 42% In 2009

Mar. 2--DURHAM -- Blue Cross and Blue Shield of North Carolina's annual profit for 2009 dropped by 42 percent from the previous year, mostly because of higher medical costs and a lack of membership growth, the company announced on Monday.

The state's largest health insurer raked in $107.3 million in 2009, down from $186.3 million in 2008 and halved from its peak in 2007, when BCBSNC generated $209.1 million in annual profit.

Although the Chapel Hill-based company posted $5.2 billion in revenues for 2009, its profit margin shrank to 2.1 percent, which equals to 2.1 cents made for each dollar of revenue. By comparison, the company had a 3.6 percent profit margin in 2008 and sets a target range of 3.5 to 4.5 percent annual profit margin.

BCBSNC's new president and CEO Brad Wilson gave a positive statement in a news release.

"During this down economy, when many insurers have lost customers, Blue Cross is holding its own," Wilson said. "We remain strong and viable and focused on meeting the health care needs of our customers every day."

The company attributed the lack of membership growth to the economy. Membership levels stayed roughly the same from 2008 to 2009, at about 3.7 million customers.

As far as medical costs, the company had waived copays on generic drugs for the first half of 2009 to encourage customers to use more generics.

"Generics are supposed to hold down prescription costs and the company made an investment in the program to begin those discussions with [doctors] and patients," said spokesman Lew Borman. "So it was mixed. Customers taking advantage saved out of pocket. We paid for the investment."

The use of generic prescriptions among BCBSNC customers went up nearly two percentage points to approximately 68 percent from December 2008 to December 2009.

Borman also pointed to increases from COBRA and aging customers in certain groups, as well as H1N1 and the seasonal flu, for the rising medical costs.

The company spent more than $4 billion in claims and medical expenses during the year, compared to $3.9 billion for 2008. The company paid a total of over $11.3 billion for both insured and self-funded customer claims.

BCBSNC also spent more of every premium dollar on the medical care of its customers in 2009 -- nearly 87 cents per premium dollar compared to just over 85 cents in 2008.

In taxes, BCBSNC paid nearly $134 million to local, state and federal governments.

The company continued to rank as one of the Triangle's top ten private employers. BCBSNC's employed more than 4,600 workers at the end of 2009.

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