Top health insurers report Q1 losses, blame ACA

Compliance with new provisions of the Affordable Care Act were cited as factors in the first-quarter losses reported by four major Massachusetts health insurers Friday.

Blue Cross Blue Shield of Massachusetts, Harvard Pilgrim Health Plan, Tufts Health Plan and Fallon Health each reported operating losses in the first quarter: Blue Cross, the state’s largest insurer, incurred an operating loss of $73.1 million, and a net loss of $41.8 million; Harvard Pilgrim, the second largest, lost $19.6 million and $17.6 million, respectively; Tufts, the third largest insurer, lost $24.2 million and $19.9 million, while Worcester-based Fallon reported an operating loss of $6.6 million and a net loss of $4.2 million.

Blue Cross, Harvard Pilgrim and Tufts each highlighted taxes and fees related to the Affordable Care Act (ACA) specifically as key factors behind the widening quarterly losses, while Fallon’s chief financial officer, R. Scott Walker, said results “reflect the challenging conditions in the marketplace, including the regulatory impact within the merged market, rate reimbursements for certain government programs, and the growing demand for high-cost specialty drugs.”

Blue Cross CFO Allen Maltz also called out the costs of specialty drugs.

“… The major story of the quarter, and likely for the year, is the increasing cost of so-called specialty medications which continue to rise after growing more than 30 percent in 2014,” he said in a statement.

Among the essential health benefits included in the ACA, also referred to as Obamacare, is prescription drug coverage, with insurers now required to cover specialty drugs for patients with conditions such as arthritis and multiple sclerosis.

The number of specialty drugs available on the market is also growing rapidly: Nearly 70 percent of all FDA drug approvals in 2013 were for specialty medications, compared to just one-third of approvals in 2008, according to HealthPocket.com, a technology company that specializes in health plan information and the ACA.