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Healthcare Claims Climb Nearly 11% For Blue Cross And Blue Shield Companies

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CHICAGO – December 14, 2005 – Blue Cross and Blue Shield companies across the country collectively paid out more than $111 billion in healthcare claims in the first six months of 2005. The Blue Cross and Blue Shield Association (BCBSA), which represents the independent BCBS companies that collectively insure nearly 1-in-3 Americans, announced today that medical claims payments increased by 10.9 percent or $11.0 billion over the same period the previous year.

BCBSA also announced continued record growth in System-wide enrollment. Total aggregate enrollment among Blue Cross and Blue Shield companies grew for the 11th consecutive year, reaching 93.6 million members at mid-year – up from 92.3 million in December 2004.

According to BCBSA President and CEO Scott P. Serota, rising medical costs continue to consume the vast majority of every premium. In response, the Blues are taking a more aggressive approach to creating a better healthcare system, strengthened by making knowledge work for better and more affordable care in communities nationwide.

“Clearly, as healthcare costs continue to grow at about three-times the rate of inflation, the biggest challenges to healthcare affordability are on the medical cost side,” said Serota. “However, the Blues believe that our healthcare system can make the vast amounts of evidence-based information work more effectively for providers, employers and consumers, leading to better quality and a more efficient system. Ultimately, this will save costs in the long run.

“In the coming year, the Blue System will be announcing a series of important initiatives to help make our vision of a knowledge-driven healthcare system a reality.”

On average, nearly 87 percent of every Blue Plan premium dollar paid for medical claims. Costs for administering medical benefits stayed at about 10 percent – well below the industry average. System-wide net gain for the year was slightly more than 3 percent.

According to Serota, the strong growth in Blue-branded business is being driven by continued success in the national accounts market and by consumers searching for innovative solutions to better, more affordable care for themselves and their families.

“Consumers continue to value the peace of mind knowing Blue Cross and Blue Shield companies provide the health benefits designed to meet their needs. In addition to having the widest networks of physicians and hospitals, best pharmacy programs and portability across the country and throughout the world, Blue Plans are providing the tools consumers need to make better informed choices about their healthcare needs.”

For the first six months of 2005, total system-wide gross revenue was $128.4 billion, up from $116.3 billion in for the same period in 2004 due to increased enrollment and premium increases to keep pace with rising claims cost and utilization. Average administrative expenses for Blue Cross and Blue Shield companies fell from 10.2 percent of gross revenue in 2004 to 10.0 percent in 2005. The six-month system-wide aggregate net gain was $4.0 billion (3.1 percent of gross revenue), up from $3.7 billion (3.2 percent of gross revenue) for the first six months of 2004.

2005 mid-year aggregate capital reserves were $54.6 billion, up from $51.1 billion at year-end 2004. Growth in capital reserves reflects the need for Blue Plans to hold increased contingency funds as enrollment increases and healthcare costs continue to rise dramatically across the country.

The Blue Cross and Blue Shield Association is made up of 39 independent, locally operated Blue Cross and Blue Shield companies that collectively provide healthcare coverage for more than 93 million – nearly one-in-three – Americans.

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