Business & Tech

Harvard Pilgrim, Tufts Health, and Fallon post losses for 2016

Three of the state’s four largest nonprofit health insurers suffered operating losses last year, which they blamed on the growing costs of medical care and prescription drugs.

Only Blue Cross Blue Shield of Massachusetts said it earned a small operating profit in 2016. Harvard Pilgrim Health Care, Tufts Health Plan, and Fallon Health posted steep losses.

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Harvard Pilgrim’s loss widened to $91.3 million from a $78.8 million loss the year before. In a statement, chief financial officer Charles Goheen blamed the red ink on “a number of external factors,” but added that the company expects better results this year.

Tufts lost $53.5 million on operations last year, reversing a small profit of $2.6 million in 2015.

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Tufts chief finacial officer Umesh Kurpad attributed the results to higher use of hospitals and other medical settings by people with more expensive medical needs. Prescription drug prices, which have grown sharply in recent years, were also a factor.

“It was a combination of high pharmacy cost and increased utilization [of medical services],” Kurpad said. “We saw increased utilization in inpatient and outpatient settings. It was pretty much across the board.”

Watertown-based Tufts and Wellesley-based Harvard Pilgrim both said a program of the Affordable Care Act, called risk adjustment, affected their performance. Risk adjustment requires insurers with healthier members to make payments to those with sicker members, but the formula used to calculate the payments has widely been criticized.

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Fallon Health of Worcester lost $28.6 million on operations in 2016, up from $17.5 million in 2015. Fallon executives said in a statement that they are working aggressively to control expenses.

Boston-based Blue Cross, the state’s largest insurer, posted operating income of $7.6 million last year, reversing a loss of $30.8 million in 2015.

“This was a year of trying to get back to a break-even position after years of losses,” said Andreana Santangelo, chief financial officer at Blue Cross.

Insurers announced their results as they brace for changes to the national health care law. President Trump and congressional Republicans want to overhaul the law but have not detailed a replacement plan or said when it might take effect.

“We are carefully monitoring the changes to the Affordable Care Act, how that might affect trends, how that might affect offerings,” Santangelo said. “It’s a very dynamic environment.”

Priyanka Dayal McCluskey can be reached at priyanka.mccluskey@globe.com. Follow her on Twitter @priyanka_dayal.
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