2013 profits reported by region’s three largest health insurers

April 01--The three largest insurers in Western New York all reported full-year profits for 2013, according to the companies' annual state regulatory filings.

HealthNow New York, the Buffalo-based parent of BlueCross BlueShield of Western New York, reported the best profit margin -- 1.29 percent, on $2.46 billion in premium revenue. Independent Health of Amherst reported the best turnaround, a $19.6 million net income for 2013 after a net loss of $50.1 million the previous year, on $1.84 billion in revenue.

Excellus BlueCross BlueShield of Rochester, parent of Univera Healthcare of Amherst, reported 0.8 percent net income on $6.3 billion in premium revenue.

The insurers made their annual financial disclosures during March, with HealthNow and Excellus filing their reports at the beginning of the month and Independent Health releasing its report Tuesday.

The insurers are nonprofits, as opposed to privately held or publicly traded companies. As a result, any income they make after paying off claims and administrative expenses is put back into their reserves. More than 90 cents of every dollar goes toward members' medical costs, the reports showed.

Across all lines of business, Excellus had more than 1.8 million members in 2013. HealthNow had 457,869 members, down by 15,380 from the year before. Independent Health had 358,000 members, up by 8,400.

HealthNow New York, which has the largest share of the local insurance market, saw its premium revenue for 2013 rise by $7.7 million, or 0.32 percent, over the previous year, while its medical and hospital expenses rose by $24 million, or 1.1 percent, to $2.22 billion.

Administrative expenses, claims adjustment expenses and investment income all rose slightly, as well.

A big reason that HealthNow saw its net income rise by 38 percent, or $8.75 million, to $31.73 million for 2013, was an improvement in its "other income" line from a loss of $19.36 million in 2012 to a gain of $8.31 million last year. The 2012 loss was related to the cost of a "non-operating software initiative," according to the company.

"The 2013 results reflect our company's strong discipline and rigor, even in the midst of implementing new mandates as part of health care reform," Stephen T. Swift, HealthNow's executive vice president and chief financial officer, said in a statement.

Independent Health reports its financial data through two entities, Independent Health Association and Independent Health Benefits Corp.

The insurer reported a decline in premium revenue of 1.13 percent, or $21 million, for 2013, as more members selected high-deductible, low-premium plans and more employers chose a self-insurance option, said Mark I. Johnson, Independent Health's executive vice president and chief financial officer.

Independent Health reported a stark improvement in its financial performance largely because of a nearly $51 million drop in medical and hospital costs, as the insurer sought to better manage those costs, Johnson said.

"The company's positive financial results were primarily driven by investment income, as a result of the strong equity markets, and its successful medical management initiatives," Independent Health spokesman Frank J. Sava said in a statement.

Excellus, the largest of the three insurers in terms of statewide enrollment, reported net income of $53 million for 2013, half the $106 million in income the company reported in 2012.

The Rochester-based insurer said stronger-than-expected investment income helped overcome a $102 million loss in its safety-net Medicaid managed care and Family Health Plus products.

Operating margin and administrative expenses fell by 7.4 percent, while spending on medical and hospital benefits for members rose by 7.9 percent, or $416 million, according to Excellus.

"While last year posed many challenges to our business, we stayed true to our mission that strives to offer affordable access to high-quality coverage," Excellus CEO Christopher C. Booth said in a statement.

Booth earned $1.69 million in 2013, his first year as CEO. David W. Anderson, who took over as HealthNow CEO on July 31, earned $363,587, with a salary of $282,692 and additional pay, including relocation costs, of $80,894.

Dr. Michael W. Cropp, Independent Health's CEO, received total compensation of $1.37 million in 2013, a drop of 9 percent from his pay of $1.5 million for 2012, driven by a $151,913 decline in additional compensation tied to the insurer's performance.

email: swatson@buffnews.com

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