BlueCross Posts $2M in TennCare Earnings

Although BlueCross and BlueShield of Tennessee "threatened" last year to drop out of TennCare because of projected losses of up to $90 million, the insurer ultimately earned nearly $2 million on the Medicaid managed care program in 2000, the Chattanooga Times & Free Press reports. Overall, "record" investment gains and enrollment figures led BlueCross to a $51.3 million net income, despite losses in its commercial HMO plans. Last year, BlueCross insured about half of the 1.3 million Tennesseans enrolled in TennCare, both as an at-risk insurer and an administrative bill-paying agency. BlueCross Vice President Ron Harr said earnings were better then "originally projected" because of changes that Tennessee implemented after BlueCross announced it might leave the program, including higher payments, tighter eligibility restrictions and limits on "some of the most troubling requirements for insurers in the program" (Flessner, Chattanooga Times & Free Press, 4/10). As of July 1, the state will also add extra insurers to TennCare and cut the number of Medicaid enrollees served by BlueCross to 300,000 (Kaiser Daily Health Policy Report, 2/27). Overall, BlueCross insures more than 4.1 million Tennesseans and paid more than $7.4 billion in claims last year. Harr added, "Our commercial business grew by 18%, which we think reflects our improving service record and relatively low administrative costs." The Times & Free Press reports that while BlueCross is not-for-profit, the company pays taxes like for-profit insurers. Last year, Blue Cross paid $24.7 million in federal income taxes and $41.1 million in state premium taxes (Chattanooga Times & Free Press, 4/10).