Sections

Weather Forecast

Close

Sanford Health Plan posts $76.5 million loss for 2015

FARGO – The Sanford Health Plan posted an operating loss of $76.5 million for 2015 as a result of higher-than-expected costs for insurance lines including the North Dakota Public Employees Retirement System.

That amount includes $38.5 million set aside to cover expected losses in 2016-17, Kirk Zimmer, the chief executive officer of the Sanford Health Plan said Thursday, March 24.

"This means we have prepaid and absorbed the majority of the losses for that period," Zimmer said.

The Sanford Health Plan outbid Blue Cross Blue Shield of North Dakota for the Public Employees Retirement System group, which provides coverage for 67,000 people, all public employees, retirees or family members.

Blue Cross Blue Shield held the contract for 37 years until the Sanford Health Plan assumed coverage in July.

"We are in the risk business and we understand taking on a group that size is a risk," Zimmer said, adding that any new group is a risk to insure. "This is just a larger scale."

The loss also resulted from higher-than-expected costs for health policies sold to individuals through the marketplace under the Affordable Care Act.

Despite the losses, the Sanford Health Plan's capital and surplus increased last year, thanks to a capital infusion of $85 million from parent Sanford Health to bolster its health insurance subsidiary's finances.

"We look at that as an investment in the future," Zimmer said.

The Sanford plan's capital and surplus was $29.6 million, up from $24.1 million the previous year, he said.

The capital infusion was enabled by the strength of Sanford Health, a $5 billion health system, he said.

The subsidy for the health insurance plan will not affect health delivery, said Cindy Morrison, a Sanford executive vice president.

"Patient care is always protected," she said.

There will be no layoffs for Sanford Health Plan employees, Morrison said. "Absolutely not." The Sanford plan, which is based in Sioux Falls, S.D., has 250 employees, including about 85 in Fargo. A new office will open soon in Bismarck, adding seven or eight employees, Zimmer said.

"We have a growing business in North Dakota," he said.

Despite the financial losses, customer surveys indicate public employees are happy with their new health coverage, and there was no financial loss to the state or other political subdivisions, he said.

Both the public employees' group and "Obamacare" coverage losses involved new product lines with new members whose health care use was hard to predict, Zimmer said. Predictions will improve over time as the insurance plan acquires more knowledge and experience in those markets, he added.

"With any new contract, there is a period of learning and understanding the book of business," Zimmer said.

Many insurance companies around the country have experienced losses from their Affordable Care Act business, a problem that was compounded when a financial safety net failed to materialize because Congress didn't fund it, Morrison said.

Patrick Springer

Patrick Springer first joined the reporting staff of The Forum in 1985. He can be reached by calling 701-241-5522. Have a comment to share about a story? Letters to the editor should include author’s name, address and phone number. Generally, letters should be no longer than 250 words. All letters are subject to editing. Send to letters@forumcomm.com

Advertisement
randomness