Blue Cross and Blue Shield insurers amass huge surpluses
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Nonprofit Blue Cross and Blue Shield health insurers in several states have accumulated billions of dollars in surplus money over the last decade even as they continued to raise their insurance rates by as much as 20% annually for many customers, according to a report Thursday. The study by Consumers Union found that seven of 10 such health plans across the country held more than three times the amount of surplus funds needed to remain solvent.
The plans that were studied are in Alabama, Arizona, Massachusetts, Michigan, New York, North Carolina, Oregon, Pennsylvania, Tennessee and Wyoming. They held more than $32 billion in surplus cash at the end of 2008, the report said.
Consumers Union, the nonprofit publisher of Consumer Reports magazine, called for states to reexamine the purpose of surplus funds and to reject or scale back rate increases when insurers have more surplus cash than necessary to remain solvent.
[Updated 10:33 a.m. 7/23] In response to the study, Bob Kolodgy, the chief financial officer at the Washington, D.C.-based Blue Cross and Blue Shield Assn., said in a statement that appropriate reserves are vital. ‘To suggest that reserves should be reduced now at a time when health care reform has created an untested and uncertain environment, would be reckless.’
-- Duke Helfand