Harvard Pilgrim Health Care, a nonprofit health services company serving the New England region, announced that it incurred a net loss of $48.5 million at the end of 2016, citing challenges related to Obamacare.
The nonprofit was founded in 1969 and built its reputation on lowering health care costs, improving care, and enhancing patients' experiences through innovation. The nonprofit currently offers health care coverage to 1.3 million members.
Even though the nonprofit's membership grew by tens of thousands of members, the company has seen losses continue from year to year.
In the fourth quarter of 2015, the nonprofit reported a net loss of $39.7 million and an operating loss of $41.5 million on revenues of $698 million. A year later, in the fourth quarter of 2016, the nonprofit reported a net loss of $1.6 million and an operating loss of $33.5 million on revenue of $740 million.
The company cited the Affordable Care Act as a reason for these losses, noting Obamacare's special enrollment period and the risk corridor and risk-adjustment programs. The risk-corridor program hands funds from profitable insurers to those insurers that cite losses while the risk-adjustment program hands funds from plans with lower-risk enrollees to those with higher-risk enrollees.
Harvard Pilgrim also cited increasing medical utilization and higher pharmacy costs as reasons for these million-dollar losses.
"Our year-end results reflect a number of external factors that the health insurance industry has been facing," said Charles Goheen, the chief financial officer of Harvard Pilgrim Health Care. "We have invested in medical and administrative cost improvement programs and completed installation of our new core technology system."
Goheen added that "with significant expansion investments in Connecticut and the Medicare Advantage program and alignment of sustainable growth strategies in all of our markets, we are forecasting a significantly improved 2017."