Blue Cross Blue Shield of Michigan Reports Operating Margin of 1 Percent for 2019

by Meghan O'Brien

| 5 min read

DETROIT, March 2, 2020 — Blue Cross Blue Shield of Michigan today reported positive results for 2019 across its key performance measures. The nonprofit mutual insurer will post an operating margin of $248 million on revenue of $30.2 billion for 2019, based on Generally Accepted Accounting Principles (GAAP). The operating margin of less than 1 percent for 2019, when included with the past nine years of financial performance, keeps BCBSM’s average operating margin over 10 years to less than 1 percent. The complete and audited 2019 GAAP financial statement will be released in the company’s annual report in May. BCBSM gained health insurance membership nationally — with 5.38 million members residing in all 50 states. The company’s positive financial performance also will allow BCBSM to make another $85 million payment to the Michigan Health Endowment Fund in March – bringing the company’s cumulative payments to $525 million to protect Michigan’s most vulnerable residents. “We are moderating or lowering our health insurance rates for individuals, small employers and seniors while keeping our profits low, but positive,” said Daniel J. Loepp, BCBSM President & CEO. “We are giving back to Michigan to strengthen the safety net and protect the vulnerable. And we are leveraging our investment holdings and non-health subsidiaries to strengthen our financial foundation and take pressure off our health insurance business for profitability.” Strong performance in the national workers’ compensation market by BCBSM for-profit subsidiary AF Group brought in $116 million in positive margin that BCBSM uses to improve the affordability of its core health offerings. Based in Lansing, Mich., AF Group is one of the largest specialty writers of workers’ compensation insurance in the nation. BCBSM also had a very strong investment year in 2019, generating positive investment returns of $603 million on a GAAP basis within its conservatively invested portfolio. Positive investment performance lessens pressure on BCBSM’s health insurance lines of business to provide financial margins to improve the company’s capital position. “Blue Cross Blue Shield of Michigan is a diversified enterprise with a rising national reputation and a solid foundation in Michigan,” Loepp said. “As a nonprofit mutual, our business diversification and investment performance strategies are critical to help us achieve our primary goal – access to affordable, quality health care for our health insurance members.” Blue Cross and its subsidiaries offer a diverse portfolio of products aimed to provide health care access and security. The portfolio includes commercial health insurance, workers’ compensation, dental, vision, Medicaid and Medicare Advantage, as well as health care technology and business process services to health care industry clients. Highlights of BCBSM’s 2019 performance include:
  • Health Insurance Membership – Total membership for BCBSM and Blue Care Network, its HMO subsidiary, in Michigan and other states combined grew by 35,736 members in 2019 – to 5,384,452 members.
  • Small Group Membership and Rates – Blue Cross small employer membership was stable in 2019, the result of ongoing efforts to moderate insurance rates for small businesses – with nine quarterly rate reductions in the small employer market since 2015.
  • Medicare Advantage Membership and Rates – Medicare Advantage membership grew in 2019 to 526,289 combined individual and group members. BCBSM and BCN Medicare Advantage plan rates were maintained or lowered. The comprehensive plan offerings include Basic and HealthValue HMO plans that carry a $0 monthly premium and Essential plan-featured premiums under $10 in most regions of the state.
  • ACA Individual Market Membership and Rates – Blue Cross saw total membership in its individual plans come in at 189,500 in January 2020 following the annual open enrollment period. For 2020, BCBSM decreased average premiums for its individual Marketplace plans.
  • Improved Credit Rating and Capital Position – BCBSM’s Risk Based Capital position continued to improve in 2019. In October, the ratings agency A.M. Best upgraded BCBSM’s credit rating from an A- rating to an A rating with a stable outlook. Under Statutory Accounting rules, BCBSM’s Risk Based Capital improved in 2019 to a year-end RBC of 712 percent.
  • Launch of Blueprint for Affordability – In December 2019, BCBSM announced partnerships with leading Michigan health systems and physician organizations to promote quality, affordable care. This “full financial risk” contracting approach is the largest effort of its kind in the nation.
  • Giving Back to Michigan – Because of the company’s strong financial performance, BCBSM is scheduled to make a payment of $85 million to the Michigan Health Endowment Fund in March 2020. A nonprofit governed by an independent board, the Health Endowment Fund supports 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 $525 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, BCBSM posted $166 million in underwriting gains on SAP revenue of $9.2 billion in 2019. Blue Cross Blue Shield of Michigan, a nonprofit mutual insurance company, is an independent licensee of the Blue Cross and Blue Shield Association. For more company information, visit and

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