Blue Cross Blue Shield of Michigan Reports Strong Enterprise Performance for 2018 Across Membership, Operating Margin and Capital Position

Helen Stojic

| 5 min read

DETROIT, March 1, 2019 — Blue Cross Blue Shield of Michigan and its subsidiary companies today reported successful year-end results for 2018 across primary measures of performance. Health insurance membership grew in Michigan. Strong performance in the workers’ compensation market by Blue Cross for-profit subsidiary AF Group brought in $187 million in positive margin that BCBSM will use to improve the affordability of its core health offerings. The company will post an operating margin of $605 million on revenue of $29.3 billion for 2018, based on Generally Accepted Accounting Principles (GAAP). The margin of 2.1 percent for 2018, when included with the past nine years of financial performance, brings BCBSM’s average operating margin to zero percent over that time. The complete and audited 2018 GAAP financial statement will be released in the company’s annual report in May. “We are a Michigan company with national reach and diversified revenue streams that go well beyond our core health insurance business but support our goal of delivering affordable health coverage to our members and customers,” said Daniel J. Loepp, BCBSM president and CEO. “We are a proud Michigan company with national reach across our lines of business. Our health plan members reside in all 50 states. Our AF Group subsidiary is a national leader in workers’ compensation that operates in 50 states.” Blue Cross and its subsidiaries offer an array of products aimed to provide health care access and security, including commercial health insurance, workers’ compensation, dental, vision, Medicaid and Medicare Advantage, as well as health care technology and business process services to health care clients. “We are growing our membership, while moderating our health insurance prices and keeping overall profitability to an average of zero over 10 years,” said Loepp. “At the same time, we’ve grown beyond health insurance by diversifying our lines of business and expanding the reach of our products and services across the nation.”
  • Small Group Membership – Blue Cross saw a significant increase in small employer membership for the third year in row, resulting from its ongoing efforts to moderate insurance rates for small businesses – with nine quarterly rate reductions in the small employer market since 2015. Small employer-based membership grew by 22,171 members in 2018 and is at its highest level since mid-2014.
  • Individual Market Membership – Blue Cross saw total membership in individual plans come in at 219,000 following the company’s effort to moderate pricing in the Affordable Care Act marketplace. BCBSM put forward its lowest average rate increases since the launch of the ACA marketplace in 2013 – an average 1.1 percent premium increase on the HMO plans where 75 percent of its membership resides, and an average of 4.2 percent on its PPO plans.
  • Health Insurance Membership – The company’s national health insurance membership totaled 5.34 million members. Michigan membership grew by 89,577 members in 2018 – to 4,713,466. This was driven by strong gains in new small group business and high retention in the existing small group market.
  • Operating Results and Subsidiary Performance – BCBSM reported positive health insurance performance, showing a positive operating margin of 2.1 percent. The overall gain of $605 million on a GAAP basis was enhanced by profitability from BCBSM’s Emerging Markets Division – which includes Lansing-based AF Group, which posted a profit of $187 million in 2018. Positive performance by BCBSM’s non-health lines of business allows the company to moderate pricing in its health insurance lines of business, keeping health coverage more affordable.
  • Consolidated Investment Performance – In a challenging investment year with extreme volatility, BCBSM generated a positive investment margin of $137 million on a consolidated GAAP basis within its conservatively invested portfolio. Positive investment performance lessens pressure on BCBSM’s health insurance lines of business to drive financial margins.
  • Capital Position – BCBSM’s Risk Based Capital position continued to improve in 2018 – but remains in the lower-half of all Blue Plans nationally. BCBSM holds an A- rating from ratings agency A.M. Best. In 2018, A.M. Best issued a revised credit rating that removed a negative outlook it issued during 2017. Under Statutory Accounting rules, BCBSM’s Risk Based Capital improved in 2018 to a year-end RBC of 683 percent.
  • Giving Back to Michigan – Because of the company’s strong financial position, BCBSM is scheduled to make a payment of $85 million to the Michigan Health Endowment Fund in March 2019. A nonprofit governed by an independent board, the Endowment Fund provides money to support efforts around Michigan to invest in health, protect the vulnerable, and subsidize supplemental coverage for low-income Medicare beneficiaries. The upcoming payment will bring BCBSM’s total payments to $440 million.
Statutory Financial Reporting Information BCBSM also will file a financial statement with the State of Michigan that is based on a different accounting standard – Statutory Accounting Principles (SAP). This accounting method does not include subsidiaries and some investments and has other differences from GAAP accounting. It is required by state regulators but does not represent a comprehensive consolidated view of BCBSM’s enterprise financial performance as a nonprofit mutual. Under SAP accounting, the company posted a statutory net gain of $559 million which includes investment gains, underwriting gains and statutory accounting adjustments on revenue of $9.1 billion in 2018.
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Blue Cross Blue Shield of Michigan, a nonprofit mutual insurance company, is an independent licensee of the Blue Cross and Blue Shield Association. BCBSM provides and administers health care benefits to 4.7 million members residing in Michigan in addition to employees of Michigan headquartered groups who reside outside the state. The company is committed to delivering affordable health care products tailored to lifestyles and specific health goals through a broad variety of plans for businesses, individuals, and seniors. Beyond health care coverage, the company provides impactful community initiatives and leadership in improving health care. It has fulfilled its unique nonprofit mission for 80 years. We are a Michigan employer with more than 10,000 employees at BCBSM and its subsidiaries. For more company information, visit and
MI Blues Perspectives is sponsored by Blue Cross Blue Shield of Michigan, a nonprofit, independent licensee of the Blue Cross Blue Shield Association