DURHAM, N.C. – Blue Cross and Blue Shield of North Carolina (Blue Cross NC) finished 2021 in a strong, stable financial position despite a lingering pandemic and record high claims and medical expenses. Increased membership, strong management of the company’s investment portfolio, and continued progress in the company’s value-based program, Blue Premier, allowed the company to fight rising medical costs and invest in capabilities for members.

“While many industries are just now feeling the effects of inflation, Blue Cross NC has been working to address rising medical costs for years,” said Mitch Perry, chief financial officer of Blue Cross NC. “Our fiscal preparation and focus on making health care better, simpler, and more affordable for our members helped us keep rates stable, but there is still more work to do as inflation and drug prices continue to rise.”

In 2021, membership grew by 11%, to nearly 4.3 million. The opportunity to serve 440,000 Healthy Blue Medicaid members contributed to increases in membership and revenue. Unrealized gains in the company’s investment portfolio also contributed to revenues increasing from $9.9 billion in 2020 to $10.7 billion in 2021. Net income for 2021 was $569 million, resulting in a net income ratio of 5.3%. Operating income ratio was negative 0.4%.

Financial Results*





$10.7 billion

$9.9 billion

$9.9 billion

Net Income

$569.3 million

$260.5 million

$492.0 million

Net Income Ratio




Operating income ratio




Taxes (Federal, State, Local)

$370.9 million

$544.6 million

$431.3 million

Claims and Medical Expenses

$8.2 billion

$7.5 billion

$7.3 billion

Months in Reserve

5.75 months in reserve

5.38 months in reserve

5.24 months in reserve

Membership (including Blue Card®)

4.29 million

3.86 million

3.81 million

*Financial results, excluding months in reserve are GAAP results. Net income ratio calculated based on 2020 Financial Accounting Standards Board recommendations.

COVID-19 costs doubled, record high medical costs

Blue Cross NC saw the three highest health care cost months in its history during 2021. Total claims and medical expenses rose by $700 million, from $7.5 billion in 2020 to $8.2 billion in 2021, as was largely expected with increased membership, but per member claims also increased. The pandemic and rising drug costs were the top drivers of increased medical costs on a per member basis. Claims data also shows members did not defer wellness and preventive care in 2021 as some did in 2020, with claims largely returning to pre-pandemic levels. 

  • COVID-19-related claims more than doubled, rising from $185 million in 2020 to $378 million in 2021. Policies put into place at the beginning of the pandemic to support members, providers, and communities extended well into 2021.
  • Blue Cross NC provided a total of $1.2 billion in COVID-related expenses in 2020 and 2021. This included claims, member, provider, and community direct and indirect financial support.
  • Drug costs rose by 10% in 2021, driven by a 15% increase in the cost of specialty drugs such as antidiabetics and those used to treat autoimmune and dermatological conditions.
  • Blue Cross NC worked to support providers and increase access to behavioral health services. By expanding virtual coverage at the onset of the pandemic, telehealth usage increased by approximately 7500% in 2020, which has persisted into 2021. This equals a total spend of approximately $76 million per year.

“Even as the price tags on medicine and treatment are rising, we were able to keep costs steady for our members,” said Perry. “Investments, innovation in new payment models and strong collaboration with providers, doctors and hospitals are critical to making health care more affordable in the future.”

Making health care more affordable

Despite record-high health costs in 2021, thanks to strong financial management and investments in new payment models, Blue Cross NC has been able to invest in its members, keeping premiums stable and focusing on new and innovative ways to deliver care and keep costs down.

Blue Cross NC saved more than $100 million by actively managing its operating costs in 2021. The expansion of its industry-leading value-based program, Blue Premier, continues to generate millions in cost savings.

Blue Premier
Blue Premier generated $197 million in cost savings and quality improvements in 2020, according to a 2021 analysis from Blue Cross NC. Despite the pandemic, the impact of Blue Premier grew as providers made gains in quality and cost measures and as additional health systems and physician practices joined one of the nation’s leading value-based care efforts. The $197 million estimated total impact includes cost savings, quality improvements and a slowdown in the rate of spending on health care. It follows $153 million in savings in 2019, giving the program a $350 million impact in just its first two years. These efforts help Blue Cross NC curtail the impact of medical cost inflation over time.

Cost Savings Measures

Blue Cross NC is finding innovative ways to reduce costs by partnering with providers to launch and expand new products with lower costs, creating a network with lower unit costs for high-cost specialty drugs, helping members gain access to the most effective and lowest cost drug options, and reducing wasteful spending. Alo is an example of an important collaboration to help support independent physicians. Blue Cross NC is also finding solutions such as working with Avalon Healthcare Solutions, a leading lab benefits manager, which generated $112 million in cost savings and quality improvements for Blue Cross NC members in 2020.

Financial stability for our members and the future

State law requires the company to maintain reserves equal to a minimum of three months and maximum of six months of claims and administrative expenses in order to ensure financial stability for its customers. Blue Cross NC finished the year with reserves of 5.7 months.

Blue Cross NC also maintains a strong, diversified investment portfolio which allows the company to plan for the long term and invest in new capabilities that help drive transformation.

Looking forward, there is continued uncertainty around COVID-19 that is expected to continue into 2022. Increased competition across all lines of business in North Carolina creates additional uncertainty, but the company has been prepared by offering competitive products and focusing on innovation and creative ways to deliver affordable care. Blue Cross NC is the market leader in many segments and continues to grow.

“As a not-for-profit, Blue Cross NC does not have shareholders, which gives us the flexibility to invest earnings directly toward lowering our customers’ out-of-pocket costs and to make significant investments in capabilities for our members,” said Perry. “Our financial strength and stability give us the ability to fight for our members during the pandemic and beyond.”

About Blue Cross and Blue Shield of North Carolina:

Blue Cross and Blue Shield of North Carolina (Blue Cross NC) is committed to making health care better, simpler and more affordable. We have been driving better health in North Carolina since 1933, working to tackle our communities’ greatest health challenges. Blue Cross NC serves its customers and communities of 4.3 million members, including approximately 1.1 million on behalf of other Blue Plans. Blue Cross NC is an independent licensee of the Blue Cross and Blue Shield Association. Visit Blue Cross NC online at www.bluecrossnc.com. All other marks are the property of their respective owners.