Highmark took a $175 million net loss last year as rising health insurance usage battered the Pittsburgh-based company.
Financial results released Tuesday also showed a $674 million operating loss for Highmark, even as revenue rose year-over-year to $32 billion from $29 billion. Highmark Health Plans, the organization’s insurance division, was responsible for most of the operating loss.
An aging population in Highmark’s footprint across Pennsylvania, West Virginia, Delaware and western New York is driving a yearslong trend of claims increases, according to the organization. It also cited claims pressure as a reason for a $209 million operating loss in 2024.
“We’ve seen a real uptick in the number of things that are being done and the need and the severity of care,” said Highmark CEO David Holmberg.
Covering GLP-1 medications like Ozempic has put a damper of finances, Highmark said. Specialty cancer drugs and biologic medications, which are made from specially engineered living cells, have also grown more costly and popular, according to the company.
Highmark expects high demand for care to last through at least this year and has raised the price of its plans to compensate.
Allegheny Health Network, the 14-hospital system under Highmark, posted a strong performance last year with $90 million in operating income, up from a $147 million operating loss the year prior.
Operational efficiencies and investments in care access helped drive down costs, according to Carl Daley, chief financial officer for Highmark. Patient volume increased across all major categories, and especially for physician visits.
The health system says it has boosted these visits by simplifying the scheduling process and reducing administrative work for doctors to allow more time for patient care. It’s also working with Highmark’s insurance arm to contact members and encourage them to get regular checkups.
Uncompensated care costs reached $763 million last year, a figure Highmark expects will climb going forward due to changes to government insurance programs.
Between the end of some Affordable Care Act subsidies last year and Medicaid work requirements that will go into effect next year, millions of Americans are expected to lose insurance coverage.
Hospitals are often unable to collect payments from patients who can’t afford insurance, much less care. Nonprofit health systems like Allegheny Health Network also provide charity care to people with and without insurance as a condition of their tax-exempt status.
Highmark’s other major businesses were a mixed bag, with insurer United Concordia Dental reporting $88 million in operating income and stop-loss HM Insurance Group taking a $107 million operating loss.
Highmark has nearly $12 billion in cash and investments — a measure of liquidity — and almost $10 billion in net assets, like real estate and equipment. It employs more than 44,000 people.
An affiliation with Blue Cross Blue Shield of Kansas City will close March 31, bringing the largest nonprofit health insurer in Missouri under the Highmark umbrella. On the provider side, Allegheny Health Network plans to buy two-hospital Heritage Valley Health System this year, pending regulatory approval.
Rival insurer and health care system UPMC made $286 million in operating income last year, mostly thanks to its clinical services. A turnaround on the insurance side offered a big boost, too, with the division improving to a $68 million operating gain in 2024 after a $506 million operating loss in 2023.
Highmark did not return a request for comment on its struggles relative to UPMC.