Independence Blue Cross reports sharply lower profits in 2022 as consumers return to their doctors
The company said health care utilization in its Medicaid business returned to pre-pandemic levels.
![Independence Health Group, the parent of Independence Blue Cross, AmeriHealth New Jersey, and other companies, reported a decline in profits in 2022. The company’s headquarters is at 1901 Market St. in Center City.](https://www.inquirer.com/resizer/lNPEbRDKIRUveUHXjZhykNeNgDc=/760x507/smart/filters:format(webp)/cloudfront-us-east-1.images.arcpublishing.com/pmn/ZHSDZQTDZZA6JFD6WCTY5IAP4M.jpg)
Independence Blue Cross’ parent company on Wednesday reported a steep decline in profits in 2022, as the pandemic waned and people again started using medical care in greater numbers.
The biggest health insurer in Philadelphia — whose coverage lines include Medicaid, Medicare Advantage, and private insurance — had $575 million in operating income last year, down from $1.4 billion the year before. Revenue climbed to $27.4 billion from $24.7 billion.
Independence officials said a big driver of the reduced operating profit was the return to pre-pandemic levels of medical care covered through its large Medicaid business, AmeriHealth Caritas, which covered 3 million people in 10 states and Washington, D.C., and accounted for about $20 million of the Philadelphia company’s revenue last year.
Overall, Independence collected $26.5 billion in insurance premiums last year, up 11% from 2021. But medical claims jumped 15%, to $23 billion, the company reported.
Gregory E. Deavens, Independence president and CEO, said the company is contending with broad shifts in the health-care landscape, most notably continued growth in Medicare and Medicaid. Payments to doctors and hospitals in those government-sponsored plans lag inflation and the rates paid by employer-sponsored plans.
“That’s why you’re seeing this incredible pressure and deterioration in financial performance across the health care provider ecosystem,” Deavens said. “Obviously, we hear that because they come back to us on contract negotiations to try to negotiate better rates on the commercial side of the business.”
Deavens said that when hospitals ask to negotiate new rates for a contract up for renewal, as happened last fall, the company tends to work on a contract extension that might include bigger percentage increases in insurance payments in the first year, but then returns to normal rate increase in later years.
Despite its profit decline last year, Independence’s operating results were strong compared to a selection of peers. Its operating profit margin of 2.1% was higher than those of comparable Blue Cross Blue Shield companies in Massachusetts, Michigan, Minnesota, and across Pennsylvania, at Highmark Health.
Horizon Blue Cross Blue Shield of New Jersey has not yet released its financial results for 2022.