BCBS plans get $2.3B windfall under new tax law

Morgan Haefner - Print  | 

Blue Cross Blue Shield health plans in aggregate gained $2.3 billion in 2017 as a result of new federal tax law, according to a report from ratings agency A.M. Best.

Under the Tax Cuts and Jobs Act, BCBS companies reported a total change of $4.7 billion in net deferred income tax for 2017. That's compared to $854 million in net deferred income tax for 2016.

However, because of changes under the TCJA, several of the Blues plans also saw a negative change in the value of the deferred tax asset. This partially offset their change in net deferred income tax to the $2.3 billion total, according to A.M. Best's briefing.

The benefits varied by plan, with Health Care Service Corp. recording a net effect of $1.1 billion for 2017 under the new tax code. BCBS of Michigan and Horizon Healthcare Services posted positive effects over $300 million, while several other plans saw positive gains totaling more than $100 million.

"The impact of tax reform, combined with an overall improvement in earnings, resulted in a favorable change to capital and surplus in 2017 of almost $8.8 billion for the aggregated Blues," according to A.M. Best.

More articles on payer issues:
BCBS of Massachusetts blames federal taxes for $97.2M operating loss
BCBS of Tennessee to put $50M in tax savings toward lower premiums, new consumer tools
Judge: The way BCBS plans operate could automatically violate antitrust laws

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