Univera Healthcare parent reports slim profit despite $163M operating loss

The Buffalo News, N.Y.Buffalo News

Univera Healthcare’s parent company on Monday reported an operating loss last year of $163 million, on revenue of $6.5 billion, as the insurer saw increases in the cost and demand for health care.

But “stronger-than-expected investment results” offset the loss, allowing Rochester-based Excellus BlueCross BlueShield to post a slim net margin of 0.4%, or $25.6 million, last year.

Univera Healthcare exterior (copy) (copy)

Univera Healthcare leases space at 205 Park Club Lane in Amherst.

That means Excellus returned to profitability after logging a net loss of $23 million in 2023.

In a news release, Excellus said it was financially affected by high claims payments and a shift in how the federal government sets hospital reimbursement rates for Medicare. With the change to the Medicare Wage Index, Excellus last year reimbursed hospitals $100 million more for Medicare Advantage members, but the insurer did not see an increase in government funding. The health plan’s Medicare Advantage products lost more than $200 million last year due to the wage index changes and increases in health care costs.

Highmark Western and Northeastern New York on Friday reported something similar. Highmark said the federal changes led to a $106 million loss in its Medicare Advantage business last year. That was about 75% of Highmark’s net loss last year of $140 million.

Local Highmark affiliate reports loss of $140 million in 2024

The health plan, which employs 1,600 people across New York, pointed to increases in medical and prescription drug costs and changes to the Medicare Advantage program.

Amherst-based insurer Independent Health will file its annual financial statements by March 31.

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 comprise a small slice of membership for most insurers, but provide a window into the rising cost of health insurance for consumers.

Excellus spent about $6 billion last year, or about $16 million a day, on medical and drug benefits for its members. Excellus reported the following increases on medical spending by condition: 11% on cancer to $614 million; 13% on heart and circulatory issues to $589 million; 13% on joint, bone and muscle conditions to $542 million; 12% on neurological, eye and ear issues to $442 million; and 10% on digest disorders to $330 million.

Spending on prescription drugs, meanwhile, reached $865 million.

The company said it spent 92 cents out of every premium dollar collected on health care for members. The remainder of that premium dollar is spent on taxes, operating expenses, customer service, claims processing and IT infrastructure.

Coalition of 26,000 WNY government workers switches health insurance carrier from Highmark to Univera

The Labor-Management Healthcare Fund, which has about 26,000 members across governmental and public entities, has a new three-year contract with Univera that will start Jan. 1.

Excellus’ state-mandated reserves stood at $1.7 billion at the end of 2024, enough to pay for 91 days of claims and operating expenses.

Excellus employs about 4,500 people across upstate New York, including 540 based in Western New York with Univera. Univera leases space in Amherst.

Across 39 counties of New York State, Excellus has 1.43 million members. Of that, Univera has 100,338 members in the eight counties of Western New York.

Univera last year picked up a major three-year contract with the Labor-Management Healthcare Fund, which has about 26,000 members across governmental and public entities. That contract started Jan. 1.