Investment Income Saves Blues
Blue Cross Blue Shield of Michigan generated investment income of $120.4 million in 2001, offsetting a $48.3 million operating loss that came on revenues of $6.99 billion. After taxes and a $2.8 million unrealized loss on investments, the Blues added $53.3 million to the subscriber reserves, which are used in the event of an emergency or economic downturn.
The Blues’ small group market narrowed its losses in 2001 to $20 million, from $66 million in 2000, Chief Financial Officer Mark Bartlett said. The small group market covers more than 1 million people at small businesses statewide and lost more than $400 million in the previous five years.
Blue Cross Blue Shield of Michigan was able to trim the small group loss on the backs of premium increase averaging 15 percent to 20 percent across the state, Bartlett said.
He said the insurer still needs action in Lansing to reform the state heath insurance market to enable it to better compete with for-profit commercial carriers that it accuses of cherry-picking younger, healthier employee groups, and avoid further large premium increases that he believes will eventually price small businesses out of the market.
“If this basic problem is not corrected, the Michigan Blues, as well as many small businesses, will face financial struggles,” Bartlett said.