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PITTSBURGH — Despite higher-than-expected Obamacare costs, Highmark Health reported Thursday that the first half of 2015 shows the health insurance giant is financially sound.

In a conference call from headquarters in Pittsburgh, two executives said the insurer’s June 1 merger with Wilkes-Barre-based Blue Cross of Northeastern Pennsylvania was lucrative and left Highmark with a pre-tax year-over-year revenue increase of $289 million.

The acquisition was one line item on the overall financial report that revealed the Pittsburgh-based health insurance provider’s strengths and weaknesses.

Highmark reported continued growth in commercial and senior insurance products, as well as in their diversified business holdings that include dental and vision networks.

“Highmark reported a 98 percent health insurance renewal rates,” David L. Holmberg, president and chief executive officer at Highmark Health, said during the mid-year financial performance conference call Thursday. “This shows our (insurance) products are respected and valued.”

Karen Hanlon, executive vice president and chief financial officer at Highmark Health, reported the company’s vision and dental networks, which include Visionworks, Davis Vision and United Concordia Dental, had a gain of $128 million at the end of June.

Visionworks opened 15 new stores nationwide during the first six months of the year, making a total of 660 stores. Davis Vision has grown to include about 22 million enrollees, Hanlon said.

One key loss

But Highmark had one unforeseen loss. It reported an operating loss of $171 million in the first half of the year. The loss was attributed to premium rates set for the 2015 Affordable Care Act, or “Obamacare” policies.

The cause, Hanlon said, was that Highmark had to establish 2015 ACA policy rates based on 90-day ACA performance in 2014. It is an industry standard practice to set rates for the upcoming year in advance, she said.

The ACA policy rates will be re-evaluated for 2016 to make up the loss, she said.

The impact of the ACA also revealed an increase of 50 percent in chemotherapy claims and 43 percent in congestive heart failure claims, Holmberg said.

“Nearly 90 percent of the ACA population is in need of chronic care,” he said.

The effect of ACA has created a company-wide movement to increase information on health issues and bring medical care closer to clients, Holmberg said.

“We believe our strategy is sound, and our outlook is promising,” Hanlon said.

Highmark Health, a not-for-profit health insurance provider, employs over 35,000 people nationwide, serving nearly 40 million people in 50 states.

By Eileen Godin

[email protected]

Reach Eileen Godin at 570-991-6387 or on Twitter @TLNews.