Thrilled With Trump’s Tax Law: Blue Cross Blue Shield Parent HCSC Reaps $1.7 Billion Refund
The Chicago-based company that operates a lucrative network of Blue Cross Blue Shield health insurance plans made out like gangbusters with President Donald Trump’s tax law. Even though it paid no taxes last year, it collected a massive $1.7 billion tax refund, according to the company’s latest financial report.
The tax giveback boosted the net profit for Health Care Service Corp. to $4.1 billion on $35.9 billion of revenue, according to its filing, which was first reported by Axios. The company reported $1.3 billion in net profit on $32.6 billion of revenue in 2017.
Corporate taxes were slashed 40 percent by Trump (from 35 percent to 21 percent). The law also eliminated the corporate alternative minimum tax (AMT), which had mandated that companies pay some minimum tax on their income. That left corporations not only paying significantly lower tax rates but also holding AMT credits from previous years that they could use for refunds.
HCSC — the parent company of the BCBS plans in Illinois, Montana, New Mexico, Oklahoma and Texas — lobbied hard for the changes.
The company spent only 64 percent of the premiums it collected in its Obamacare plans on medical care. A provision in the Affordable Care Act requires that insurers spend at least 80 percent of monthly premium dollars for medical costs rather than on administration, marketing or profits. If that threshold isn’t met, the company has to refund money. HCSC said in a statement that it would pay rebates consistent with federal law, Axios reported.
In another eye-popping insurance company benefit, the Detroit News reported last week that Daniel Loepp, CEO of Blue Cross Blue Shield of Michigan, was paid $19.2 million in total compensation last year, making him one of the highest-paid bosses of any health insurer in America. Sen. Bernie Sanders (I-Vt.) blasted Loepp’s high compensation at a time when nearly 800,000 Michigan resident are going without health insurance.