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Blue Cross Blue Shield income down significantly in 2009

http://66.225.205.104/JR20100303a.mp3

The swine flu, the recession and a general rise in medical costs led North Carolina's largest health insurer to net less money in 2009 than the previous year. Blue Cross and Blue Shield of North Carolina says it had net income of just over $100 million last year, compared to $186 million in 2008. But membership in the state's largest health insurer remained steady and premiums went up an average of 12 percent. So why the lower net income? Blue Cross spokesman Lew Borman says medical costs went up and the H1N1 flu took a bite out of profits. "Blue Cross this past year spent more of every premium dollar on the medical care of our patients - nearly 87 cents per dollar compared to last year it was 85 cents," says Borman. "The rest of the premium dollar goes for customer service and technology. Borman also points to costs associated with a six-month program Blue Cross ran at the start of 2009 waiving prescription co-pays for customers who chose generic drugs. That effort got praise from policy analyst Adam Linker of the NC Justice Center's Health Access Coalition. But Linker also worries Blue Cross is socking away more money in reserves than it should be during a recession. "In the past - in Blue Cross' history - there were times when they gave rebates to people when they had a giant reserve," says Linker. "They have a reserve of well over a billion dollars now and they're still making profits of over $100 million, so they really should be making premiums as affordable as possible for people." Blue Cross argues its premiums are affordable in North Carolina with an average increase of 12 percent, compared to some states like California where customers are suing Blue Cross for raising rates more than 30 percent. As for the issue of putting money in reserves, Lew Borman says Blue Cross of North Carolina's fund amounts to about a thousand dollars per customer, which he says wouldn't be much in the face of a major flu outbreak or other health crisis.