Blue Cross and Blue Shield companies witnessed significant financial improvement in the first half of this year, according to Fitch Ratings.
"Premium rate increases, operational changes that tightened enrollment and underwriting practices on marketplaces established by the Affordable Care Act, lower than anticipated utilization trends and 2017's temporary suspension of the ACA's health insurer fee contributed to the improvement," said Mark Rouck, senior director at Fitch Ratings.
The 34 BCBS companies included in Fitch Ratings' report collectively underwrote a gain of $5.1 billion more in the first half of 2017 than in the same period last year. In addition, premium growth surpassed benefit growth by approximately $2.3 billion, while administrative expenses fell by about $2.8 billion.
Overall, 31 of the 34 BCBS companies achieved net profits in the first half of 2017, with most of those companies reporting higher net profits than in the same period last year.
"Key near-term challenges faced by the BCBS Companies include the potential for financial and operational uncertainty derived from efforts to repeal and replace the ACA and from changes in the way the federal government provides its share of Medicaid funding," Fitch Ratings added. "Additionally, the resumption of the health insurer fee in 2018 is likely to suppress net earnings and surplus formation in 2018 in comparison with 2017."
Fitch Ratings expects solid full-year results for the BCBS companies.