A Look At A Non-profit Insurer’s Financials

By Ryan Schuster

As a former business reporter, I’ve grown accustomed to reading through earnings statements and writing stories about how profitable a company is and how much sales increased. But this time I was stopped in my tracks while writing one of those same news releases about Blue Cross Blue Shield of North Dakota’s 2011 annual report. I kept looking at the numbers in disbelief: BCBSND reported nearly $23 million in net income in 2011. “That sounds like a lot of money,” I thought to myself. “That will help pad the bottom line.” Then I scanned to the bottom of the page and reminded myself that as a non-profit, BCBSND doesn’t have profits. What’s left after paying member medical bills, expenses and taxes goes into reserves to help cover unexpectedly high member medical bills, a safety net for an emergency like a flu outbreak. Here is an explainer of how your premium dollar is spent.

I knew before I started working at BCBSND that the company was non-profit, but it’s easy to forget, especially with all the talk nationally about greedy insurance companies. Another set of numbers jumped out at me as I looked over the financial statement — BCBSND paid out more than $917 million in member claims in 2011, leading to premium income of more than $1 billion. In the last decade, claims expenses have more than doubled, mirroring a national trend of rapidly rising health care costs as Americans get more tests and more expensive treatments. During the same time period, premiums have also nearly doubled to keep pace.

BCBSND is working on initiatives to slow health care costs, such as helping members manage chronic conditions like diabetes, which will improve their health and lead to a reduction long-term medical expenses. BCBSND is also working to hold down internal expenses. Compared with other insurance companies, BCBSND has some of the lowest administrative costs and most modest reserves. BCBSND’s administrative costs of roughly 7 percent are less than half the 15-20 percent mandated by the Affordable Care Act.

Ryan Schuster works as an editor at Blue Cross Blue Shield of North Dakota. Schuster previously served as business reporter and business editor at the Grand Forks Herald and editor of Prairie Business magazine. For more information, visit https://www.bcbsnd.com.