• Blue Cross NC reports 3.3 percent average net income over a five-year period

• Company’s revenue and paid claims reach highest level in Blue Cross NC history

• $50 million from tax law changes invested in community health initiatives across North Carolina


DURHAM, N.C. – Blue Cross and Blue Shield of North Carolina (Blue Cross NC) saw strong financial performance in 2018 despite a decrease in its net income. The company has reported a net income margin of 6.9 percent, down from 7.8 percent in 2017. The company’s 3.3 percent average net income over a five-year period (2014 to 2018) is within its target operating range.

A key driver of Blue Cross NC’s 2018 performance was the Affordable Care Act (ACA) line of business, which performed better than forecasted despite continued uncertainty and debate around health care in Washington.

“We operate the company on a long-term basis, with the goal of stability and consistency across all of our lines of business. We have been able to achieve this, with the exception of ACA plans. Ongoing uncertainty in Washington could continue to fuel volatility in the market,” said Mitch Perry, chief financial officer for Blue Cross NC. “Affordability remains a challenge in North Carolina and across the nation. We must address it by thinking differently about how we invest in areas that deliver quality care, at a lower cost and better experience for our customers.”

Financial Results* 2018 2017
Revenue $9.9 billion $9.4 billion
Net Income Ratio 6.9 percent 7.8 percent
Net Income $684.6 million $734.0 million
Taxes (Federal, State, Local) $670.0 million $511.5 million
Claims and Medical Expense (Insured) $6.8 billion $6.6 billion
Months in Reserve 4.81 months in reserve 4.4 months in reserve
Membership (including Blue Card®) 3.72 million 3.81 million








*Financial results, excluding months in reserve are GAAP results.

Medical Expenses Climb Despite Slight Decrease in Customer Base

Blue Cross NC continues to face strong competition across all lines of business, particularly as a not-for-profit insurer. The company saw a slight decrease in membership at year-end, which fell to 3.72 million from 3.81 million customers in 2017. This includes customers served on behalf of other Blue Cross plans.

Despite the slight decrease in its customer base, Blue Cross NC saw claims and medical expenses increase to $6.8 billion, up from last year’s claims of $6.6 billion, reaching the highest level in the company’s history. Average annual claims per person climbed to an average of $5,326 per fully insured member. Some of the services driving these higher medical costs include injectable drugs and infusions, specialty drugs, and treatments for chronic conditions such as hemophilia and anemia.

State law requires the company to maintain reserves equal to a minimum of three months of claims and administrative expenses in order to ensure financial stability for its customers. Blue Cross NC finished the year maintaining reserves at a level of 4.81 months.

Savings for Customers, Investments for Health System Transformation

While 2018 plan pricing was largely set prior to the Tax Cuts and Jobs Act, Blue Cross NC was able to pass the savings back to its customers and communities once the law took effect.

The company invested $50 million in health initiatives across North Carolina. Specifically, these investments are addressing health issues related to the opioid epidemic, early childhood development, housing and transportation, and more. These community investments are part of the company’s long-term journey of transformation to dramatically improve the health of all North Carolinians.

Blue Cross NC members saw a historic 4.1 percent decrease in ACA plan rates for 2019 – the company’s first rate decrease in the individual market in more than 25 years. Rates for 2020 individual ACA plans will be submitted and reviewed in the spring. The company also reduced Medicare Advantage premiums in several markets for 2019. Rate increases for other lines of business were also historically lower than in years prior.

“We’re on a long-term journey to achieve higher quality, at a lower cost and better experience, and this work will continue to require a significant amount of resources and investments in order to create meaningful change across the health system,” Perry said.

The company expects to issue ACA related rebates to Individual, Student and Small Group customers in the fall of 2019. Medical Loss Ratio requirements ensure the vast majority of customers’ premium dollar is used towards medical costs. This is the first time ACA rebates will be issued, with an anticipated average rebate of less than $75 per member.

As a not-for-profit, Blue Cross NC does not have shareholders and invests its earnings directly towards improving pricing, services and operations for its customers. The company continues to allocate resources and investments for initiatives to transform the health care system and improve affordability over the long term.

At the beginning of 2019, Blue Cross NC announced Blue Premier, which fundamentally changes how the company pays for care through the most rapid and comprehensive move to value-based payments in the nation. The company is also allocating more resources towards behavioral health and improvements in primary care across the state.

About Blue Cross NC:
Blue Cross and Blue Shield of North Carolina (Blue Cross NC) improves the health and well-being of our customers and communities by providing innovative health care products, services and information to more than 3.7 million members, including approximately 1 million served on behalf of other Blue Plans. Since 1933, we have worked to make North Carolina a better place to live through our support of community organizations, programs and events that promote good health. Blue Cross and Blue Shield of North Carolina is an independent licensee of the Blue Cross and Blue Shield Association. Visit Blue Cross NC online at bluecrossnc.com. All other marks are the property of their respective owners.

2018 Year-End Financials Briefing - Premium Dollar Breakdown Infographic - FINAL JPEG