Dive Brief:
- Health Care Service Corp., parent of Blue Cross insurance plans in five states, let go an undisclosed number of employees last week, according to Modern Healthcare.
- The layoffs come as an aftermath of HCSC’s financial losses after taking on enrollees who bought health plans on the ACA exchanges.
- The insurer is one of several that reported losses in their 2015 annual and Q4 earnings as they struggle to be financially successful following the implementation of these exchanges in 2013, Forbes reported.
Dive Insight:
Greg Thompson, spokesman for HCSC, the largest private employer in Chicago, would not disclose any information on the people who were let go. But the company said in a memo its IT group had gotten rid off some maintenance positions and “new external partners” will be taking care of the work. A separate company document stated consulting companies Accenture and Cognizant were hired as “strategic business partners” for maintenance and support, Modern Healthcare reported.
HCSC’s Senior Vice President and CIO Steve Betts wrote in a memo to the employees in the IT group, “We determined we must shift the focus of HCSC employees from routine maintenance activities to more strategic services that develop new capabilities that ultimately improve our service to customers.”
According to a financial statement, HCSC, which had about 15 million members at the end of 2015, had a $281.9 million loss in 2014, compared to a $684.3 million surplus in 2013. Their losses demonstrate the impact of the ACA exchanges on its business.
Last year, UnitedHealth Group lost more than $720 million on its ACA business, and Anthem, which operates Blue Cross plans in 14 states, said ACA plans caused profits to fall 64% in Q4, Forbes reports.
The problem stems from a significant increase in medical expenses from previously uninsured patients, many of which were sick and expensive. However, the insurers say 2016 could be a breakout year as they figure out pricing and reduce provider networks to have better control over costs.
Yet, the individual plan market is a relatively small bit of these insurers' business. So much so that Covered California Executive Director Peter Lee stated UnitedHealth should be looking at what mistakes they made instead of "throwing the Affordable Care Act under the bus."