Fitch Ratings expects the Blue Cross and Blue Shield companies to report a decline in earnings for 2015.
Of the 35 BCBS companies, 23 reported a collective $1.9 billion decline in earnings for the first nine months of 2015 and 16 reported net losses, according to Fitch. BCBS of Michigan was the biggest contributor to the year-over-year decline, as its earnings fell $622 million in the first nine months of 2015.
Cost and utilization trends from Affordable Care Act state insurance exchanges have been higher than anticipated and are the primary drivers of the BCBS companies' declining earnings, according to Fitch. The companies have also struggled with striking a balance between their nonprofit status and the need to make adequate and efficient investments in their business.
The outlook for the BCBS companies is brighter in 2016, as Fitch believes earnings are likely to improve this year due to premium rate increases, regulatory changes and benefit redesign aimed at improving underwriting.
More articles on payer issues:
Highmark isn't the top insurer in Western Pa. anymore, UPMC analysis says
Moody's: Health insurer mega-mergers to disrupt entire sector
Q3 comparison: 9 things to know about how 7 major payers stack up