Healthcare Claims Top $206 Billion for BCBS in 2004

May 27, 2005

A report released this week noted that the 40 Blue Cross and Blue Shield companies across the country collectively paid out a record $206 billion in healthcare claims in 2004.

The Blue Cross and Blue Shield Association (BCBSA), which represents the independent BCBS companies that collectively insure nearly 1-in-3 Americans, announced that medical claims payments increased by 10.4 percent or $19 billion over the previous year.

In addition to record claims payments, BCBSA also announced record System-wide enrollment. Total aggregate enrollment among Blue Cross and Blue Shield companies grew for the 10th consecutive year, reaching 92.3 million members at year’s end – up from 88.8 million the previous year.

According to BCBSA President and CEO Scott Serota, rising medical costs continue to consume the vast majority of every premium dollar and the complexity of the key drivers behind those costs present the biggest challenges to keeping quality healthcare affordable today.

“On average, more than 86 percent of every Blue Plan premium dollar paid for medical claims,” said Serota. “Costs for administering medical benefits stayed below industry averages at 10 percent. System-wide net gain for the year was about 3 percent. Clearly, as healthcare costs continue to grow at about three-times the rate of inflation, the biggest challenges to healthcare affordability are on the medical cost side.”

According to Serota, the strong growth in Blue-branded business is being driven by continued success in the national accounts market and by consumers searching for innovative solutions to better, more affordable care for themselves and their families.

For 2004, total system-wide gross revenue was $238.9 billion, up from $216.8 billion in 2003 due to increased enrollment and rate increases to keep pace with rising claims cost and utilization. Average administrative expenses for Blue Cross and Blue Shield companies fell from 10.6 percent of gross revenue in 2003 to 10.2 percent in 2004. System-wide aggregate net gain was $7.4 billion (3.1 percent of gross revenue) for the year, up from $6.1 billion (2.8 percent of gross revenue) in 2003.

2004 year-end aggregate capital reserves were $51.1 billion, up from $37.8 billion at year-end 2003. Growth in capital reserves reportedly reflects the need for Blue Plans to hold increased contingency funds as enrollment increases and healthcare costs continue to rise dramatically across the country.

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