Independent Health reports a $66 million loss for last year, a big improvement from 2023

Amherst-based Independent Health on Tuesday reported a net loss last year of about $66 million on revenues of $2.5 billion as the health plan continued to grapple with rising health care and pharmaceutical costs.

Despite the loss, it is a big improvement for Independent Health compared with 2023, when the insurer recorded a net loss of about $193 million on revenues of $2.3 billion.

Independent Health (copy)

Independent Health on Tuesday reported a net loss of about $66 million for 2024.

Independent Health President Jim Dunlop said the improvement was driven by a strategy implemented more than a year ago, which helped to effectively manage administrative expenses and boosted overall revenue by $183 million.

“We’re on track,” Dunlop told The Buffalo News. “We’re actually exceeding our expectations, and things appear to be headed in the right direction. We’re not out of the woods yet, but we’re definitely trending in the right direction.”

Dunlop is “cautiously optimistic” that Independent Health could break even or post a slight profit in 2025. But, he said, the health plan will have a better idea of how 2025 will shake out once it has received about four months’ worth of claims.

Independent Health’s 2023 financials included a $34.5 million guaranteed payment in a recent settlement with the federal government to resolve claims that a former subsidiary defrauded Medicare. In the fall of 2024, Independent Health eliminated 66 jobs, or about 4% of its workforce, as it strove to trim costs. The health insurer also has been reducing its real estate and lease expenses.

Dunlop said Independent Health is working with health care providers in the community to rein in medical expenses, particularly pharmaceutical costs. He noted that administrative costs represent only 10 cents of every member premium dollar, while medical expenses make up the other 90 cents.

“Medical is really the area where we have the most opportunity to improve,” Dunlop said. “Most of our focus this year, if not all of our focus, is primarily on, how do we work more collaboratively with our provider community to reduce medical costs?”

Independent Health’s two main rivals also reported challenging results for 2024.

Highmark Western and Northeastern New York, the local affiliate of Pittsburgh-based Highmark Health, reported a net loss of $140 million in 2024, on revenue of $3 billion. Highmark attributed $106 million – about 75% of the total loss – to its Medicare Advantage business due to increased use and federal changes, which included increases in hospital payments, a cap on out-of-pocket expenses for members and government reimbursement rates that stayed flat.

Rochester-based Excellus BlueCross BlueShield, which includes Univera Healthcare, reported an operating loss last year of $163 million on revenue of $6.5 billion. But strong investment results offset the loss, allowing Excellus to post a profit of $25.6 million.

Double-digit health insurance rate increases – some over 20% – coming to WNY

The state on Friday disclosed the approved health insurance rates for 2025. Many consumers and small businesses will be looking at double-digit increases that, in some cases, will top 20%.

All three local health plans were approved by the state for health insurance rate increases for 2025 for the individual and small group markets, which constitute a small slice of membership for most insurers, but provide a window into the rising cost of health insurance for consumers.

Despite Independent Health’s improvement in 2024, the health plan’s pharmacy expenditures increased 11% to $371 million, including $20 million alone on GLP-1s – such as Ozempic and Wegovy – used for weight loss.

Like its competitors, Independent Health also felt the effects of changes to the Medicare Advantage program that saw reimbursements reduced by about 3%. Medical inflation and rising labor costs also continued.

“Health insurance is a cyclical business,” Dunlop said. “Although the past few years have ended in deficits, we have weathered our industry’s post-pandemic challenges and are on an upward trend toward positive financial performance and continued operational strength.”

Independent Health’s state-mandated reserves stand at $285 million. The company, including its affiliates, has 1,400 full-time-equivalent employees.

Independent Health said its membership last year remained stable, coming in at about 350,000 members across all lines of business. The company grew membership in its Medicare Advantage business and had a 98% retention rate in its large group business, which were offset by some losses in small group and individual markets, as well as in its state programs due to the Medicaid eligibility redetermination process.

The health plan also reported other operational improvements, such as transitioning to electronic delivery of communications based on members’ preferences, which saved nearly $1 million. In addition, the health plan increased its use of biosimilar specialty pharmaceuticals, which helped reduce the cost per member by 3%.

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