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Blue Cross and Blue Shield of Massachusetts Files First Quarter 2008 Financial Results

CONTACT: Susan Leahy
(617) 246-4823
Susan.Leahy-Schuh@bcbsma.com

May 15, 2008 — Blue Cross and Blue Shield of Massachusetts, Inc. (BCBSMA) and Blue Cross and Blue Shield of Massachusetts HMO Blue, Inc. (BCBSMA HMO Blue) filed statutory first quarter 2008 financial results today, reporting a combined after-tax net loss of $2.2 million. This total is comprised of an after-tax net income of $14.5 million for BCBSMA and a net loss of $16.7 million for BCBSMA HMO Blue.

For the first quarter of 2008, BCBSMA earned premiums of $566.5 million and incurred $505.5 million in health care claims. BCBSMA experienced a $3.4 million operating loss, earned $21.4 million in investment income and incurred $177,000 in federal taxes for the reporting period.

For the first quarter of 2008, BCBSMA HMO Blue earned premiums of $ 1.1 billion and incurred $1 billion in health care claims. For the reporting period, BCBSMA HMO Blue experienced a $41.7 million operating loss and earned $25 million in investment income.

"BCBSMA experienced a high rate of medical costs in the first quarter of 2008 due to seasonal increases in health care costs related to the flu and other seasonal illnesses," said Allen Maltz, BCBSMA Chief Financial Officer.

Maltz added that improving the quality and affordability of health care has been and will continue to be a major focus for BCBSMA in 2008. "We're working on a number of innovative short-term and long-term strategies that will slow the growth in health care costs and improve the quality of the care our members receive, Maltz said. As an example, he pointed to the company's new alternative quality contract which is aimed at rewarding doctors for the outcome of the care they provide instead of the volume or quantity of care.

In addition the company continues to introduce care management programs intended to help members manage chronic illnesses like diabetes and asthma. "Our pharmacy management programs continue to slow the pharmacy trend and our efforts to promote the use of generic drugs have resulted in real savings for employers and members, said Maltz. "In 2007, more than half of BCBSMA's members treated for high cholesterol were treated with generic statins, resulting in $27 million in lower costs including $9 million in lower out-of-pocket co-payments for members. All of this was achieved while the number of statin prescriptions increased.

The impact of economic factors such as the corporate consolidation of businesses has affected health insurers across the country and resulted in a decrease in first quarter combined enrollment for BCBSMA and BCBSMA HMO Blue of approximately 35,000 members. The consolidation of Gillette into Proctor & Gamble alone resulted in the loss of 17,000 BCBSMA members. Many of these Gillette employees are enrolled in Anthem BCBS in Ohio, and as a result, BCBSMA will continue to serve as the host plan for 4,765 Massachusetts-based Proctor & Gamble employees. For the full year of 2008, BCBSMA expects modest membership growth.

 

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.

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