BOSTON February 27, 2009 Blue Cross and Blue Shield of Massachusetts, Inc. (BCBSMA) and Blue Cross and Blue Shield of Massachusetts HMO Blue, Inc. (BCBSMA HMO Blue) announced its 2008 calendar year, statutory financial results today and is reporting combined after-federal-tax net income of $105.4 million which includes $1.6 million in operating income, with investment income of $111.9 million. BCBSMA incurred $19.5 million in federal income taxes and $29.0 million in state premium taxes. In addition, BCBSMA paid the state a $21.0 million assessment on its financial reserves. For financial reporting purposes, the state assessment was treated as an expense, reducing the fourth quarter operating income and net income.
In 2008, BCBSMA and BCBSMA HMO Blue earned combined premiums of $6.7 billion and experienced $6.0 billion in claims. In 2008, BCBSMA and BCBSMA HMO Blue's combined medical care ratio, which measures medical care as a percentage of premium dollars, was 89.5 percent. The average premium increases in 2008 for insured commercial BCBSMA and BCBSMA HMO Blue members, after benefit changes, were 5-6 percent.
For the calendar year of 2008, BCBSMA reported a statutory, after-tax, net income of $83.7 million. BCBSMA earned premiums of $2.2 billion and incurred $1.9 billion in health care claims. BCBSMA earned $38.9 million in operating income and $52.9 million in investment income.
BCBSMA HMO Blue reported a $21.7 million statutory net income for 2008. BCBSMA HMO Blue earned premiums of $4.4 billion and experienced claims of $4.0 billion. BCBSMA HMO Blue experienced an operating loss of $37.3 million and earned $59.0 million in investment income during 2008.
"Blue Cross and Blue Shield of Massachusetts delivered another strong year of results despite the unprecedented economic and market turmoil that began to unfold in the second half of 2008. Given the economic outlook for 2009, our company is more focused than ever on delivering more affordable products to our members and accounts. We believe the most promising way to moderate the cost of health care is by improving the quality of care our members receive. The initiatives we have underway are aimed at addressing the estimated 30 percent of health care spending that is wasteful and potentially harmful to our members," said Allen Maltz, Chief Financial Officer, Blue Cross and Blue Shield of Massachusetts.
Earlier this month, Blue Cross and Blue Shield of Massachusetts also announced a series of steps to reduce administrative spending including a freeze on salaries and hiring as well as actions that will reduce compensation for the company's senior executives in 2009 by approximately 30-50 percent. In addition to reducing its own administrative expenses which accounts for approximately $.10 of every premium dollar, the company continues to focus on the $.90 of every premium dollar that is used to pay for the health care services its members receive by encouraging the use of evidence-based medicine to eliminate waste and improve the quality of health outcomes for its members.
Maltz went on to explain the impact of the economy on BCBMSA including:
For the fourth quarter of 2008 BCBSMA HMO Blue experienced a net loss of $5.1 million. BCBSMA HMO Blue earned premiums of $1.1 billion and incurred $1.0 billion in health care claims during the reporting period. BCBSMA HMO Blue experienced a $19.8 million dollar operating loss, earned $14.7 million in investment income, and incurred a state assessment of $14.0 million in the fourth quarter of 2008.
For the fourth quarter of 2008, BCBSMA earned a net income of $24.4 million. BCBSMA earned premiums of $561.1million and incurred $490.8 million in health care claims. BCBSMA experienced $14.2 million in operating income, earned $13.6 million in investment income, and incurred a state assessment of $7.0 million. BCBSMA incurred $5.6 million in federal income taxes for the reporting period.
BCBSMA continues to be the leading private health insurer in Massachusetts, insuring the health of three million, thirteen thousand three hundred and ninety-nine members as of December 31, 2008.
Blue Cross Blue Shield of Massachusetts ( http://www.bluecrossma.com ) was founded more than 70 years ago by a group of community-minded business leaders. Today, headquartered in Boston, BCBSMA provides coverage to more than 3 million members, 2.5 million in Massachusetts. BCBSMA believes in rewarding doctors and hospitals for delivering safe and effective care, and in empowering patients to take more responsibility, become educated health care consumers and become stronger partners with their doctors. Blue Cross Blue Shield of Massachusetts is an independent licensee of the Blue Cross Blue Shield Association.