By Steve Brawner, © 2025 by Steve Brawner Communications, Inc.
Arkansas Blue Cross and Blue Shield had a rough 2024 financially. In a recent appearance on Talk Business & Politics, President and CEO Curtis Barnett offered some reasons why.
The company lost $226.2 million in 2024 after earning $13.2 million in 2023, according to its filing with the Arkansas Insurance Department. It announced it was laying off 75 employees, or 2% of its workforce, in January.
Barnett said other insurers are also struggling with high costs. He listed several factors. One is the Medicaid redetermination process in 2023. All recipients intentionally had been left in the program throughout the pandemic. Once the pandemic ended, the eligibility process resumed, and many recipients were removed from the program. That process disrupted the health insurance market in 2024, he said. Second, health providers want insurance companies to increase payment rates, which he said was understandable given their inflation challenges and workforce shortages. Third, he said patient utilization of services “skyrocketed” in 2024. Joint replacements were 37% higher than they were in 2019, which he attributed largely to pent-up demand coming out of the pandemic. Finally, he mentioned “high cost claimants” and pharmaceutical costs.
Barnett said high overall costs had caused 125 small groups with 50 or fewer employees to drop their health coverage.
His comments came as congressional Republicans are considering big Medicaid cuts. Barnett cited a reported figure of $880 billion being discussed in the House, where the conversations are ongoing. Politico reported that House Republicans are considering capping funding for the 41 states, including Arkansas, that expanded Medicaid under Obamacare. The Senate has not moved as far in its own proposals, and President Trump has expressed doubts about steep Medicaid cuts.
Barnett said such a large funding reduction would increase the pressure on private insurance companies to increase reimbursements to providers. That pressure already exists in part because government programs reimburse those providers at low rates, and the providers want insurance companies to make up the difference.
“That pressure is only going to intensify if we see the kind of Medicaid changes that are being proposed right now, and the commercial markets can’t take any more pressure,” he said.
Barnett didn’t mention two of the many other challenges facing the health care industry and health care policymakers.
One is that there’s no easy answer to this vital question: Who says no?
Every commodity must have that someone because there’s not an unlimited amount of anything.
In the free market, it’s the buyer and seller, but it’s hard to make health care operate like other marketplaces. If I go to the grocery store wanting steak but can’t afford the sticker price, then I buy hamburger. I don’t get too mad at the store, and I’m still full. We all accept this.
But we do not accept hamburger health care for ourselves and our families. Instead, we all want steak health care, especially if the medical condition is serious. Likewise, medical providers don’t want patients dying under their care because they cut costs or prioritized a rich person’s convenience over a poor person’s life. They need to avoid lawsuits, and they also have to look at themselves in the mirror.
That leaves two other entities who can say no. Insurance companies are one, which is why Americans tend to get mad at them. The other is the government, which is the choice European countries and Canada have made. Americans understandably tend to oppose that option, even as they often embrace it. In 2023, public health programs accounted for 43% of health consumption spending, according to the Peterson-KFF Health System Tracker.
Another major challenge facing the health care industry is one it can’t solve: Americans’ profoundly unhealthy lifestyles. We’re overweight, sedentary, overstressed, unrested, dehydrated, often addicted to something or multiple things, and too connected to our devices while being disconnected from nature and our loved ones. Then we want the doctor to fix whatever ails us with a pill.
The daily choices Americans make are overwhelming the system, and there are no easy answers – not for policymakers, medical providers or insurers.
It doesn’t mean Blue Cross will always have a rough year financially. But, unless a lot of things change, the health care system probably will.