CHICAGO — The parent company of Illinois' largest health insurer, Blue Cross and Blue Shield of Illinois, made a profit of $4.1 billion last year -- more than three times as much as it did the year before, according to recent financial statements.
Much of that increase was driven by $1.7 billion the company got back from the federal government last year because of changes made under the new tax law. Blue Cross' parent company, Health Care Service Corporation, operates health insurance plans in five states, including Illinois, and is based in Chicago.
The company's gains were also fueled by a growing number of customers, said Greg Thompson, a spokesman for Health Care Service Corporation.
"More people than ever before stayed with us and we now serve nearly 500,000 more people across our plans than a year ago," Thompson said in an email. "This is the result of people seeing value in our plans and choosing us for their coverage."
He said the company will continue its efforts to "stabilize or lower" costs of insurance plans for consumers next year.
Though the costs of health insurance remain a worry for many Illinois residents, Blue Cross and Blue Shield of Illinois actually lowered average premiums for many of its plans for individuals who buy insurance through the Obamacare exchange this year. The reductions followed years of rate increases, often in the double digits.
The insurer also plans to invest in technology, improving the consumer experience and expanding access to care, Thompson said.
It's not the only health insurer doing a booming business at the moment. UnitedHealth Group reported net earnings of about $12 billion in 2018. Health insurance companies had a particularly good year in 2018, partly because of steady-to-declining pharmacy costs as well as tax changes, according to AM Best.
Health insurance companies are also doing well partly because more people have become insured in recent years, said Katherine Hempstead, a senior adviser at the Robert Wood Johnson Foundation. Many are also making money selling Medicare Advantage plans, and are now profitably selling plans on the Affordable Care Act exchanges after previous losses.
"It seems like it's a pretty good time to be in the health insurance (business)," Hempstead said.
Health Care Service Corporation was losing money as recently as 2015, when it reported a loss of $65.8 million. But its fortunes reversed, starting in 2016. That year, the company made a profit of $106 million, and in 2017, its profit shot up nearly twelve-fold, to $1.3 billion.
The Tax Cuts and Jobs Act of 2017 also meant major changes to the company's tax bill last year. While Health Care Service Corporation got $1.7 billion back from the federal government last year, the year before, it paid about $467 million in federal taxes.
A number of companies got windfalls as a result of the new tax law, Hempstead said.
Blue Cross and Blue Shield of Illinois is, by far, the dominant insurer in the state. It had about 64 percent market share as of the end of 2017, according to Mark Farrah Associates. The next largest insurer in the state, UnitedHealth Group, had about 9 percent market share.