IBX had a $239 million net loss in 2024, its first red ink since 2015

Apr. 2—The parent company of Independence Blue Cross, the biggest health insurer in Southeastern Pennsylvania, on Wednesday reported a net loss of $239 million in 2024.

The Philadelphia company's first red ink since 2015 came amid industrywide challenges for health insurers.

Independence officials attributed the swing, following a $377 million profit in 2023, to large increases in medical and pharmaceutical costs, particularly for customers in Independence's government-funded Medicare and Medicaid plans.

Greg Deavens, CEO of Independence Health Group, emphasized what he called the "staggering" cost of GLP-1 drugs that are used to treat diabetes, for weight loss, and for other conditions. Independence spent $500 million on those drugs last year, $150 million more than in 2023.

"Despite the intense industrywide cost pressure, Independence Health Group remains well positioned for future growth across all segments of our business," Deavens said, adding that the company's individual and employer-based plans were profitable last year.

Independence reported $32 billion in revenue last year, up 3% from $31 billion the year before. That was the smallest percentage increase in revenue since 2018.

Last year's $929 million revenue increase included $800 million in Medicaid pass-through payments to health-care providers for special programs, Deavens said.

Medicaid challenges

Independence's majority-owned Medicaid insurer, AmeriHealth Caritas, had a difficult year. States ended coverage for people who no longer qualified for the government insurance for low-income people. That process had been suspended during the pandemic. The company's Medicaid enrollment fell 8.3% nationwide.

Patients remaining in the plans typically had greater medical needs. That was particularly problematic for AmeriHealth Caritas in Southeastern Pennsylvania, where the company had a 7% rate cut last year, Independence's chief financial officer Juan Lopez said.

Pennsylvania Gov. Josh Shapiro included a significant Medicaid rate increase in his proposed budget for fiscal 2026, but at the same time politicians in Washington are eyeing steep reductions in federal spending on Medicaid. The program relies on state and federal support.

GLP-1s and other pharma costs

Lopez noted that the use of GLP-1s for obesity treatment tripled from 2023 to 2024. This year, Independence stopped covering those drugs, such as Ozempic and Wegovy, for weight loss under its individual and fully-insured employer-sponsored plans.

Among its Medicare population, Independence saw increased costs for Merck's Keytruda, a cancer immunotherapy drug, Lopez said. The company's employer-sponsored plans saw increased use of inpatient services, he said.

The combined increase in medical and pharmaceutical costs meant that Independence spent 91.2 cents of every premium dollar on medical care in 2024, up from 87.8 cents in 2023, Lopez said. In dollar terms, medical and pharmacy claims increased by $1.2 billion.

Independence spent $144 million last year on its new back-office technology system. It used to rely on Highmark, a Pittsburgh-based Blue Cross Blue Shield company for back-office services, but decided to build its own after Highmark decided to compete in Southeastern Pennsylvania.

Lopez said Independence had "strong core market growth and retention, even in the face of competition."

Highmark added 70,000 customers in Southeastern Pennsylvania during its first year in the market, the company said last month.

Independence's overall membership fell to 7.12 million people on Dec. 31 from 8.4 million the year before. All of that decline was in Medicaid enrollment and in ancillary business, such as a pharmacy benefit manager that works with Medicaid plans nationwide.

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