Highmark reports best start of year since 1996, with $535M in overall surplus

Highmark has bounced back from a couple of tough years, executives announced Thursday.

The organization reported overall surplus - what for-profits would call profit, and what nonprofits like Highmark are required to reinvest in the community - of $535 million through June 30, its strongest financial start of a year since it was founded in 1996. For 2016, that figure stood at $36 million.

Highmark is facing increased competition as rival University of Pittsburgh Medical Center extends its provider and health insurance networks eastward, and executives said Highmark is focused on transforming health care amid rapidly changing industry conditions.

David L. Holmberg, Highmark's president and chief executive officer, credited a variety of factors, particularly "the dramatic turnaround of the health plan business."

That was most evident in Highmark's government health insurance offerings, which include the Affordable Care Act marketplace as well as Medicaid and Medicare Advantage plans. They logged a $329 million improvement attributed to pricing that "more accurately reflects the cost of providing care for this community of members."

On the marketplace plans alone, Highmark previously reported losing $590 million in 2015 and, after changes including price hikes that shed half its marketplace members, $180 million in 2016.

Karen Hanlon, Highmark executive vice president and chief financial officer, also noted a still-pending lawsuit seeking about $600 million in federal funds that the insurer believes it is owed through a "risk corridor" program intended to help insurers handle losses through the marketplace's initial period of dramatic change.

Highmark, the largest health insurer in the state, also has a health system in Western Pennsylvania, Allegheny Health Network. That's also on an upward trajectory, with profit of $28 million so far this year, compared to losses of $19 million by the same time last year.

Overall, Highmark reported net assets of $5.8 billion, a 12 percent increase since December 2016.

Credit: HEATHER STAUFFER | Staff Writer