What it means to be a non-profit insurance company

April 12, 2012 Ryan Schuster

As a former business reporter, I've grown accustomed to reading through earnings statements and writing stories about how profitable a company is and how much sales increased. But this time I was stopped in my tracks while writing one of those same news releases about Blue Cross Blue Shield of North Dakota's 2011 annual report. I kept looking at the numbers in disbelief: BCBSND reported nearly $23 million in net income in 2011. "That sounds like a lot of money," I thought to myself. "That will help pad the bottom line." Then I scanned to the bottom of the page and reminded myself that as a non-profit, BCBSND doesn't have profits. What's left after paying member medical bills, expenses and taxes goes into reserves to help cover unexpectedly high member medical bills, a safety net for an emergency like a flu outbreak.

I knew before I started working at BCBSND that the company was non-profit, but it's easy to forget, especially with all the talk nationally about greedy insurance companies. Another set of numbers jumped out at me as I looked over the financial statement — BCBSND paid out more than $917 million in member claims in 2011, leading to premium income of more than $1 billion. In the last decade, claims expenses have more than doubled as health care costs continue to rise. During the same time period, premiums have also nearly doubled to keep pace.

We're working on initiatives to slow health care costs and control our internal expenses. But compared with other insurance companies, BCBSND has some of the lowest administrative costs and most modest reserves. Our administrative costs of roughly 7 percent are less than half the 15-20 percent mandated by the 2010 Affordable Care Act.

The real picture of BCBSND's 2011 performance goes beyond numbers listed on an annual report. BCBSND continues to lead efforts to improve North Dakota's health care system and the health of members. We are committed to listening to our 470,000 members and finding ways to improve health care quality, affordability and access.