WEISS RATINGS

Blue Cross/Blue Shield Companies Suffer Large Losses, Premium Hikes or Service Cutbacks Possible

PALM BEACH GARDENS, FL, Oct. 7, 1996 - For the first time in seven years, most of the nation's 64 Blue Cross/Blue Shield companies are losing money on their underwriting, according to an analysis by Weiss Ratings, Inc. The Blue Cross affiliates lost $530 million in their underwriting business in 1995, more than wiping out their investment income that showed a 42% increase over the previous year.

Ever since 1965, every decline of this kind was consistently followed by another two years of losses," said Martin D. Weiss, president of Weiss Ratings, Inc. "If so, it will put new pressure on the Blues to either jack up premiums or cut back on their service to consumers."

Among the biggest losers: Anthem Insurance Companies (IN) lost $106 million, Empire Blue Cross/Blue Shield (NY) lost more than $97 million, Blue Cross/Blue Shield of Texas lost $45.4 million, Blue Cross/Blue Shield of New Jersey lost more than $39 million, and Pierce County Medical in Washington State lost more than $32 million.

Nineteen of the 60 companies analyzed showed profits on their underwriting, including: Health Care Service Corp. (IL) with $72 million in underwriting gains, Hawaii Medical Service Association with $37 million and Capital Blue Cross of Pennsylvania, with $35.6 million.

Weiss Ratings, Inc., the only rating agency that covers all of the Blue Cross/Blue Shield affiliates, has studied the insurance industry for more than 20 years. It publishes the Weiss Ratings HMO and Health Insurance Ratings Directory, covering all health insurance companies as well as the Blue Cross/Blue Shield plans.

A rating over the phone on any insurer may be purchased for $15. A one-page Personal Safety Brief can be bought for $25 and the directories are available for $186 from Weiss Ratings, Inc., 4176 Burns Rd., Palm Beach Gardens, FL 33410 or by telephone at 1-800-289-9222.

Blue Cross/Blue Shield Companies With Underwriting Losses

(Companies with more than $30 million in losses)

Company State Underwriting
($ Million)
Total
Premium
($ Million)
Anthem Insurance Cos. IN -106.0 1,035.1
Empire Blue Cross/Bl Shield NY -97.1 4,088.1
Medical Service Association PA -50.3 3,126.8
Blue Cross of Washington/Alaska WA -45.6 798.1
Blue Cross/Bl Shield TX -45.4 1,668.6
Blue Cross/Bl Shield NJ -39.1 1,266.3
Blue Cross/Bl Shield of Western NY NY -36.8 884.6
Pierce County Medical WA -32.3 197.8

Blue Cross/Blue Shield Companies With Underwriting Gains

(Companies with more than $10 million in gains)

Company State Underwriting
($ Million)
Total
Premium
($ Million)
Health Care Services Corp. IL >+72.3 >1,319.5
Hawaii Medical Services HI +37.0 1,197.9
Capital Blue Cross PA +35.6 1,137.0
Blue Cross/Bl Shield MD +18.4 1,354.8
Trigon Blue Cross/Bl Shield VA +12.2 1,364.6

Data Date: Dec. 31, 1995


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