The state's largest health insurer, Blue Cross and Blue Shield of Maryland, earned $48.6 million last year, more than triple its income in 1989, as total premiums climbed more than 7 percent, to nearly $2 billion, the company said.
The company's strong income last year was the most it had recorded since Blue Cross and Blue Shield merged at the end of 1984. With 1.5 million Marylanders dependent on the company for some aspect of their health insurance, the non-profit company accounts for nearly half of the state's market.
"We are gratified by our strong performance last year, which reflects improvements that began in 1989 and is attributable to our focusing on the specific needs of our customers," Carl Sardegna, chairman and president of Blue Cross, said in a statement. "We intend to use our earnings to further improve reserves, depleted a few years ago during a downturn in the underwriting cycle, and to improve service to our customers."
Much of last year's gain came as premiums collected by the company increased more than the amount the company paid out in medical claims.
For each dollar collected in premiums, Blue Cross paid 85.9 cents in health-care costs last year, according to the annual report the company filed yesterday with regulators. That compared with a payout of 86.6 cents the year before and 97.1 cents in 1986, when Blue Cross suffered a loss of $69.4 million.
Corporate expenses fell last year as a percentage of revenue, to 11.3 percent from 12.9 percent in 1989. While administrative costs rose to $57.8 million from $51.6 million in 1989, the cost for claims adjustment fell to $54.3 million last year from $67.5 million the year before.
Overall, Blue Cross earned nearly $34 million from its insurance business, compared with just $5.4 million in 1989. In addition, the company earned $12.2 million last year from its investments, an increase of more than 48 percent from 1989.
Last year's earnings were eroded by a $487,138 loss among Blue Cross' subsidiaries and an additional $20 million in various adjustments.
After accounting for the adjustments, Blue Cross' reserves increased by $28.3 million, to $44.8 million, company records showed. The reserves serve as a cushion against future losses.