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Read Making a Killing

home / healthcare / in the media

Modern Healthcare
May 26, 2003

by Laura B. Benko

Blues in the black; Earnings rise 43% as enrollment shoots up

As the Blues sought to protect brand identity last week, its member plans announced higher profits and growing enrollment.

Combined earnings at the nation's 42 Blues plans climbed 43% last year to $4 billion, while total enrollment rose 3% to 85.3 million members.

That followed a 40% jump in profits in 2001 to $2.8 billion, according to the Blue Cross and Blue Shield Association. Revenue increased 14% in 2002 to $163 billion.

As other insurers have shed members, there's been a ''flight back to the safety and security of the Blues brand,'' said Terry Cooney, managing director of brand protection and financial services for the Chicago-based Blues association.

Last September, for example, Premera Blue Cross, Mountlake Terrace, Wash., won 34,000 new members when it wooed Microsoft Corp. away from Aetna, which was undergoing a turnaround effort.

Meanwhile, Blue Cross and Blue Shield of Minnesota, Eagan, added General Mills, Northwest Airlines and Target Corp. to its client roster during the past two years.

The Blues credits the ramp-up of its national Blue Card program, which allows members to receive services through any Blues network in the country.

Since the program was fine-tuned in 1996, national account membership has grown 60%, from 9 million to 14.4 million last year.

The Blues also has benefited from the retreat of managed care, winning back business that it lost to HMOs in the 1990s, when enrollment sunk as low as 65.2 million in 1994. Blues plans, which offer a range of products, have remained insulated from the shakeout, Cooney said.

Not everyone is impressed. Critics say the plans shouldn't be bulking up their bottom lines while premiums soar and more Americans are uninsured. Profits accounted for 2.4% of Blues' premium revenue last year, up from 2% in 2001.

''The Blues' record profits are being fueled by skyrocketing premiums,'' said Jerry Flanagan of the Foundation for Taxpayer & Consumer Rights, Santa Monica, Calif., which is sponsoring a bill to require California insurers to gain state approval before raising rates.


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