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Blue Cross Says Exchanges Starting To Pay Off

In an earnings call on Thursday, Blue Cross Blue Shield of North Carolina said 2017 is the first year it has made money from health insurance plans bought through the federal exchange. The company reported a 7.8 percent increase in its net income ratio for 2017, compared with a 2.2 percent increase over the last five years. 

Blue Cross also said customers who used the federal exchange tend to be sicker and use more of the insurer's services. Those customers went to the emergency room and stayed at a hospital more than twice as much as non-Affordable Care Act customers. The 538,000 ACA customers that bought Blue Cross plans on the exchange in 2017 make up less than 15 percent of the company’s 3.8 million customers in North Carolina. On average, those customers cost Blue Cross $640 per-member per-month compared to the $450 per-member per-month for non-ACA customers. 

Blue Cross also gained about 200,000 customers from ACA plans in 2017. The company's chief financial officer Mitchell Perry said he attributes that to two other insurers leaving the state.
Perry also said the company's overall claims from ACA customers stabilized in the middle of 2017, which is why the company lowered its premium rate request from 23 percent to 14 percent for 2018. 
In October, the Trump administration eliminated the cost-sharing reduction. It was one of two federal government subsidies to help make premiums affordable for consumers for low-income consumers. The remaining subsidy is a tax credit.  

Perry said that elimination of the cost-sharing reduction and the decision not to enforce the individual mandate starting in 2019 will likely continue to impact the health care market. 

"Longer term effects of these decisions and ongoing uncertainty in Washington will lead to continued volatility in the marketplace and potentially in our annual financial performance," he said. 

Perry didn't say how much the company would raise rates for 2019. But CEO Patrick Conway told WFAE last week savings from the new tax law would go towards stemming those increases.

"Our goal is to have rate increases as low as possible next year," Conway said.