- Associated Press - Friday, February 28, 2014

RALEIGH, N.C. (AP) - Blue Cross Blue Shield of North Carolina spent $65 million more on systems projects and initiatives in 2013 than it did a year earlier, and much of that increase was attributable to preparing for the Affordable Care Act, the company’s chief financial officer said Friday.

North Carolina’s largest insurer spent $220 million in 2013 on projects such as preparing the operating system to handle new products and plans and on expanding network capacity, CFO Gerald Petkau said.

Blue Cross is one of only two carriers in the state providing plans through the ACA and the only one in all 100 North Carolina counties.

Its profits grew about 60 percent to $92.6 million in 2013, compared with $52.7 million in the previous year. Its net income ratio, the amount of profit compared with total revenue, was 1.4 percent, up from 1 percent in 2012.

Revenue increased from $5.8 billion in 2012 to $6.4 billion in 2013, a rise of about 10 percent.

The company has some confidence that the ACA will help or at least not hurt its profits, Petkau said. “I would say we’re comfortable moving forward,” he said. “We know there’s a lot of uncertainty … but we are in a relatively strong capital position.”

People began enrolling under the ACA in October, but those numbers aren’t part of Blue Cross’ numbers in 2013 because policies became effective this year. Blue Cross plans to release enrollment numbers after March 31, the deadline for enrolling, Petkau said.

“We’ll leave no stone unturned in outreach,” company spokesman Lew Borman said.

Of the company’s 3.8 million members, 400,000 are individual members under the age of 65 - the group most likely to seek insurance through ACA, Petkau said. He expects revenue growth to be higher in 2014 than 2013 because of growth in those members. And government subsidies could mean that people will buy more expensive plans than they might have otherwise, he said.

Total compensation for the top 10 Blue Cross executives ranged from $2.95 million for CEO James Wilson to $675,465 for Chief Information Officer Jogenia Abernathy. Those salaries are in line with “companies of our nature and size,” Borman said, adding that less than one-tenth of every premium dollar goes toward paying those salaries.

Blue Cross spent 86 cents of every premium dollar on medical expenses, Petkau said.


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