Arkansas Blue Cross Prepares for Change

by Mark Friedman  on Monday, May. 21, 2012 12:00 am  

Arkansas Blue Cross & Blue Shield of Little Rock saw revenue rise to $1.27 billion in 2011. (Photo by Mike Pirnique)

Two years after President Obama signed the Affordable Care Act, officials at Arkansas Blue Cross & Blue Shield still are scrutinizing the legislation to determine what it will mean for its organization and policyholders.

(Click here for a list of the largest private companies in central Arkansas.)

“I think the conclusions are: There are a lot of unknowns,” Mark White, president and CEO of ABCBS, told Arkansas Business last week. “For instance, essential benefits have yet to be defined, so we don’t know what’s going to be included there.”

Not to mention that the U.S. Supreme Court is considering the constitutionality of requiring most people to have or buy health insurance starting on Jan. 1, 2014. The justices are expected to rule this summer.

In the meantime, ABCBS is operating on the assumption that the high court will uphold the legislation. Otherwise, the company might fall behind and not be able to catch up to other insurance carriers, White said.

“We’re just continuing on with our planning like that wasn’t in play,” he said. “If we see a change of direction that’s dictated by the court, then we’ll adjust.”

ABCBS, which offers group and individual health insurance, reported revenue of $1.27 billion for 2011, up nearly 5 percent from 2010. Its revenue placed ABCBS No. 4 on this week’s Arkansas Business’ list of largest private companies ranked by revenue. It was No. 4 on last year’s list too.

Blue Cross’ revenue has been climbing steadily since 2003, when it was $901.7 million. It crossed the $1 billion mark in premium collected in 2008.

“They have a very wide network of physicians, so from the consumer’s perspective, they have a lot to choose from,” said Greg Hatcher, owner of the Little Rock insurance firm The Hatcher Agency. “They do a great job, and they’ve been able to keep their expenses very low.”

Another plus is ABCBS is a nonprofit mutual insurance company.

Having a nonprofit status helps ABCBS because it doesn’t have to pay shareholders, Hatcher said. Its net income in 2011 was $46.45 million, down 26.67 percent from a year ago. Still, the net income is held for the benefit of members to be used to pay claims or expenses when revenues aren’t enough to cover them.

White said he was pleased with 2011’s numbers, and ABCBS had a membership growth of about 5 percent in 2011 to about 377,800 members.



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