Highmark Health reports $64M operating gain

March 17--Highmark Health on Friday reported a $64 million operating gain for 2016, a major improvement over 2015 when losses on the Affordable Care Act's individual insurance marketplace drove a $545 million operating loss.

Highmark retained 94 percent of members through the year, the nonprofit's leaders told reporters Friday, while shedding about 63,000 people with individual ACA plans and raising premiums for those who stayed. The people who bought the ACA plans were sicker than the insurer expected, driving losses in 2015 and 2014, the insurer has said.

About 115,000 people across Pennsylvania, West Virginia and Delaware have individual ACA plans from Highmark, down from 178,000 in 2015 and about 350,000 in 2015, said Deborah Rice-Johnson, president of Highmark Health Plan. Highmark still lost about $180 million on the ACA line of business for 2016, and without changes, the insurer might not find stability in the market, Rice-Johnson said.

"With the right changes to the law, or it being replaced with something that we believe can create a healthy risk pool, it could become profitable. The way it sits now, it could be difficult for the health plan to become profitable," she said.

David Holmberg, the president and CEO of Highmark Health, the parent company of Highmark Inc. and Allegheny Health Network, said the company is well positioned for changes, including potential federal health reform and the 2019 expiration of a state consent decree that governs some business relations between Highmark and rival UPMC.

Highmark Health reported record revenues of $18.2 billion for the year, with $220 million coming from its commercial business and $22 million coming from its government insurance business. In 2015, revenue from commercial business was $176 million and the insurer reported a $614 million loss on its government business.

"We continue to increase our scale, we are financially strong and stable, and we maintain our leading positions in the markets in which we compete," Holmberg said.

About 2.5 million people in the 29-county Western Pennsylvania area have Highmark health insurance, and another 148,000 have Medicaid managed care plans from Highmark, the insurer reported. The insurer's Western Pennsylvania commercial market share is 55 percent -- more than double that of its largest competitor, the insurer said in a news release.

Highmark and UPMC Health Plan claim to be the largest insurer in Western Pennsylvania; different methods of counting membership make determining which is larger difficult. UPMC Health Plan claims it has 3.3 million members in Western Pennsylvania, but Highmark officials said that number is not directly comparable to its Western Pennsylvania membership.

Highmark is the largest commercial health insurer in Pennsylvania, with about 4.2 million members, according to the release.

The insurer has reduced its losses among ACA members by treating the population more like people who have Medicaid managed care plans, Rice-Johnson said.

Engaging patients using health coaches and primary care doctors to encourage them to follow treatment plans helps reduce unnecessary emergency room visits, which lowers treatment costs, she said.

Wes Venteicher is a Tribune-Review staff writer. Reach him at 412-380-5676 or [email protected].

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