Blue Cross and Blue Shield of North Carolina announced their 2009 financial results.  The financial highlights are as follows:

BCBS of NC 2009 Financial Highlights

Revenue:  $5.2 Billion

Profit: $107.3 Million

Total Medical Cost (TMC) Ratio:  87%

Taxes:  $134 Million

Customers: 3.7 Million

BCBS of NC Explanations

As part of the release of Blue Cross and Blue Shield of NC’s 2009 Financials, the company explained several components of the report.

Compared to 2008, BCBS of NC reported that customers (or membership) actually remained relatively flat.  According to the company, this was not unexpected given the economic climate in both the United States and North Carolina.  The net profit margin was considerably lower for 2009 (2.1%) compared to 2008 (3.6%) (and well below expectations).  The drop in profit margin is due, in large part, to the increased TMC (Total Medical Cost) Ratio (87% vs 85% for 2008).

BCBS of NC explained the Total Medical Cost incurred was due, in part, to the following:

Increased Cost of H1N1 & Seasonal Flu

Blue Cross & Blue Shield of NC provided its members free immunizations for both the H1N1 & Seasonal Flu during 2009.  Given their severity, a large number of members received this benefit, thus increasing cost(s) to the company.

Waiving of Co-Pays For Generic Drugs

Over the past four (4) years BCBS of NC has actively encouraged its members to use Generic Drugs whenever possible.  This focus on generic drugs will allow more members to afford their medications and keep total costs down.  To help encourage the use of generic alternatives, BCBS of NC waived all “co-pays” for generic drugs during the 1st 6 months of 2009.  BCBS of NC witnessed an increase in the use of generic drugs of 2% (to 68%) between 2008 and 2009.

Aging of Employer Groups

Given the state of the economy, many employers have “laid off” workers.  In many cases, the workers that have been laid off were “newer” employees.  Essentially, the employer groups are reducing the number of “younger” employees, thus increasing the overall age of the employer group.  On average, Total Medical Costs increase the older a person becomes.

Blue Cross & Blue Shield of NC Premium Increases

Blue Cross & Blue Shield of NC has stated that, on average, health insurance premiums will be increasing.  These increases are due, in large part, to the increased medical costs and utilization.  BCBS of NC announced that average increases on their 3 major lines of health insurance will increase as follows:

Health Savings Account (HSA’s) – approximately 3%

Individual Co-Pay Plans (Blue Advantage) – approximately 12.24%

Employer Group Plans – approximately – 15%

These increases are “averages” and individual policies and groups may experience higher or lower premium changes.


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