Profit Margins Trend Downwards for Aggregate BCBS Plans in 3Q24

January 23, 2025

According to Mark Farrah Associates’ (MFA’s) Health Coverage Portal™, as of September 30, 2024, Blue Cross Blue Shield (BCBS, or Blues) membership comprised 37.7% of total U.S. health insurance (Individual plus Employer-based, for all funding types, Medicaid & Medicare) enrollment, or 120 million members. In this brief, MFA assesses year-to-date profit margins of BCBS plans, comparing year-over-year performance from September 2020 (3Q20) to September 2024 (3Q24), based on the National Association of Insurance Commissioners (NAIC) and the California Department of Managed Health Care (CA DMHC) statutory reporting.

The aggregate profit margins for all Blues plans (net income divided by total revenues) decreased from 6.1% as of 3Q20 to 3.9% in 3Q21. The aggregate profit margin fell further in 3Q22 to 3.0% and rebounded to 3.5% in 3Q23. Following an overall downward trend, profit margins for Blues plans as of 3Q24 were 2.1%. This trend is presented in the following graph.

Leading BCBS Profit Margin Performance

The leading BCBS plans, based upon revenue through the third quarter of 2024 (3Q24), include: Elevance Health, Health Care Service Corp. (HCSC), GuideWell Mutual Holding Group, Independence Blue Cross (IBX), and Blue Shield of California (CA). BCBS plans have long been health insurance leaders across the country with diversified product portfolios, including commercial, Medicare and Medicaid business, and specialty benefits. Profit margins for the leading plans have had mixed results, due in part to portfolio differences. The most recent year-over-year profit margins for these top plans – 3Q23 to 3Q24 – are illustrated below.

• Elevance Health continued to report the largest profit margin for top Blues plans of 4.6% in 3Q24, a decrease from 4.9% in 3Q23. The company experienced a steady increase in profit margin from 3Q20 to 3Q22.
• Blue Shield of CA had a profit margin of 1.7%, the same as in 3Q23, following a decline in 3Q21 and a negative margin in 3Q22 (-2.1%).
• GuideWell Mutual Holding Group experienced a notable drop in profit margins between 3Q20 and 3Q21, from 5% to 1.9%. After slightly increasing its profit margin to 2.7% in 3Q23, GuideWell again saw a drop in 3Q24, falling to 1.6%.
• Independence Blue Cross Group (IBX) experienced a marginal increase in profit margin in 3Q24, increasing to 1.5%, a notable exception after experiencing some of the lowest profit margins amongst leading Blues plans in recent years.
• Health Care Service Corp (HCSC) reported a profit margin of 1% in 3Q24, a significant decrease from 3.9% in 3Q23, continuing its downward trajectory since 3Q20.

Conclusion

Blues plans remain financially strong and continue to gain new members, particularly in the Individual and government segments. Year-over-year, overall profitability was down through 3Q24 primarily due to the shift to lower-margin business lines. Of the leading Blues plans, only IBX reported increased profit margins, while the other top plans reported declines. With full annual results available in the spring, MFA will report on important BCBS plan performance and provide valuable health insurance insights in its future briefs.

About Mark Farrah Associates (MFA)

Mark Farrah Associates (MFA) is a leading data aggregator and publisher providing health plan market data and analysis tools for the healthcare industry. Our product portfolio includes Health Coverage Portal™, County Health Coverage™, Medicare Business Online™, Medicare Benefits Analyzer™, 5500 Employer Health ^PLUS, and Health Plans USA™. For more information about these products, refer to the informational videos and brochures, available under the Our Products section of the website (www.markfarrah.com) or call 724-338-4100.

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