Highmark Health announced mixed results in its mid-year financial report, which covers the first six months of 2015.
Highmark enjoyed pre-tax income of $289 million, up from $83 million for the same period in 2014. Nonetheless, it suffered an operating loss of $171 million. For the first six months of 2014, the insurer had a $12 million operating gain.
According to David L. Holmberg, Highmark Health’s president and chief executive officer, the loss is due to unexpectedly high use of services among those covered under the Affordable Care Act. Medical claims are higher among ACA enrollees than with other policyholders.
Other business units did well. Revenue from the insurer’s senior and commercial business rose to $172 million through June, up from $153 million for the first six months of 2014.
Looking ahead, and with more data to base decisions on, Holmberg expects results to improve. The company now knows a significant number of ACA enrollees previously had no health care and were chronically ill.
There are currently 379,000 members enrolled in Highmark through the ACA.
“Highmark Health’s mid-year results reflect good operating fundamentals in our core health plan commercial and senior business, strong performance in our diversified businesses and excellent results in our investment portfolio,” said Karen Hanlon, executive vice president and CFO.
“At the same time, we are weathering challenges in the health plan’s Affordable Care Act enrollment as well as at Allegheny Health Network, where results are lagging our expectations,” Hanlon added. “We are aggressively working to address those challenges. It’s also important to note that Highmark Health has invested more than $150 million across the enterprise through June 2015, as we believe that our strategy remains sound and our outlook is promising.”
The newly acquired Allegheny Health Network is off to a slow start with an operating loss of $16 million.
A recent merger with Blue Cross of Northeastern Pennsylvania, meanwhile, brought 264,000 members.