It’s a question we get all the time. With almost $27 billion in annual revenue, how can Blue Cross Blue Shield of Michigan claim to be nonprofit? The answer is that being a nonprofit mutual health insurance company isn’t about how much money we manage – it’s about how we manage it. It’s about purpose. And that purpose is to serve our members and communities. Here are some things to know about how our nonprofit status works, and why it’s good for our members and local communities in Michigan.
- None of our members’ money goes to stockholders. Many health insurance companies are publicly-traded corporations, meaning they are owned by Wall Street. Stockholders don’t have to be insured members – they could be mutual funds or institutional investors. Profits earned from insurance premiums and services belong to these stockholders. As a nonprofit mutual, BCBSM puts our members’ premium dollars back into delivering health care, keeping a small percentage to run our business and saving some to ensure adequate financial reserves. This approach puts people before profits.
- Our members’ care is our top priority. Not running our insurance business to maximize profits allows BCBSM to put the most money possible toward health care and benefits for our members. In 2017, our claims and benefit payments averaged $63 million per day.
- We manage profits to very low margins. Over the last 10 years, BCBSM’s operating gain – a measure of our profitability on health insurance – has averaged just below zero. In fact, BCBSM has turned a “profit” on health insurance just twice in 10 years.
- We maximize alternative revenue sources to keep coverage affordable. Our investment portfolio of stocks and bonds helps us keep insurance profits low by generating income elsewhere. In 2017, BCBSM’s investments returned income of $366 million that didn’t have to come from health insurance.
- We give back to Michigan. As every nonprofit should, BCBSM contributes to a broader social purpose. Whether it’s being Michigan’s single largest donor to free clinics providing care to the uninsured, or leading the fight against childhood obesity, or attacking the opioid crisis – BCBSM is mission-driven to improve the health of Michigan’s people over the long term.
- We help protect the vulnerable. As a nonprofit mutual, BCBSM has a special relationship with the Michigan Health Endowment Fund. BCBSM has committed $1.56 billion to the Fund over 18 years to help protect vulnerable people in Michigan’s communities over the long term.
- We pay taxes. BCBSM isn’t a tax-exempt charity. We are a nonprofit business operating in a complex and competitive industry. In 2018, BCBSM and our owned subsidiary companies will pay $384 million in taxes.
- We remain committed to Michigan. For nearly 80 years, BCBSM has been a nonprofit focused on serving our home state. This past year, we continued to put forward very affordable rates for small employers in Michigan. We remained the only insurer to offer individual plans in every Michigan county, and the only one to offer a broad access PPO. We’ve made significant strides in lowering health care costs in our state by improving quality and access.
We recognize that health insurance is a very costly proposition for our customers and members. The money we bring in from customers and members comes with a responsibility to manage it well. We do that by paying for care, diversifying our revenue sources to keep profits on insurance low, and doing our share to make our communities healthier. In the end, profitability helps us accomplish these things. Because by doing well, BCBSM can do more good.