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Alex Brandon / AP

Health Care Service Corp. — the parent company of the Blue Cross and Blue Shield affiliates in Illinois, Montana, New Mexico, Oklahoma and Texas — recorded an $869 million profit in the first quarter of 2017, according to the company's latest financial documents. That was a $1.3 billion turnaround after HCSC lost $442 million in the first quarter of 2016.

How to interpret this: The Affordable Care Act exchanges in some areas are hurting, but overall are not imploding. Many insurance companies continue to do well (like Florida Blue) or are turning things around (like HCSC). And HCSC carries a lot of weight, since it covers nearly 1.1 million people in ACA plans and is the largest Blue Cross and Blue Shield company after Anthem.

What happened: A few one-time items inflated HCSC's profit. For example, Congress suspended the Affordable Care Act's health insurance tax for 2017, and accounting rules require an insurer to book the entire fee in the first quarter. But even without the one-time items, the insurer raised premium prices a lot, particularly for its ACA exchange plans, to offset costly medical claims.

"We still would've been profitable," said Carl McDonald, HCSC's divisional senior vice president of treasury and business development. "It's really been the individual business that's driven the turnaround this year."

HCSC had lost a lot of money in the ACA marketplaces, but took a couple fundamental steps to change its position:

  • Created narrow networks of hospitals and doctors, which HCSC emphasized last year.
  • Hiked premiums to account for how sick people in the individual market are.
  • Eliminating the ACA insurance industry fee is icing on the cake, which is why large companies are pushing for its permanent removal.

Looking ahead: McDonald would not say what the company was doing for 2018, as rate filing deadlines approach and uncertainty lingers around the ACA's cost-sharing subsidies for low-income people. "At this point, it's hard to say," he said.

Go deeper

Mike Allen, author of AM
6 hours ago - Politics & Policy

Biden adviser Cedric Richmond sees first-term progress on reparations

Illustration: "Axios on HBO"

White House senior adviser Cedric Richmond told "Axios on HBO" that it's "doable" for President Biden to make first-term progress on breaking down barriers for people of color, while Congress studies reparations for slavery.

Why it matters: Biden said on the campaign trail that he supports creation of a commission to study and develop proposals for reparations — direct payments for African-Americans.

Cyber CEO: Next war will hit regular Americans online

Any future real-world conflict between the United States and an adversary like China or Russia will have direct impacts on regular Americans because of the risk of cyber attack, Kevin Mandia, CEO of cybersecurity company FireEye, tells "Axios on HBO."

What they're saying: "The next conflict where the gloves come off in cyber, the American citizen will be dragged into it, whether they want to be or not. Period."

Cedric Richmond: We won't wait on GOP for "insufficient" stimulus

Top Biden adviser Cedric Richmond told "Axios on HBO" the White House believes it has bipartisan support for a stimulus bill outside the Beltway.

  • "If our choice is to wait and go bipartisan with an insufficient package, we are not going to do that."

The big picture: The bill will likely undergo an overhaul in the Senate after House Democrats narrowly passed a stimulus bill this weekend, reports Axios' Kadia Goba.