Posted on August 18, 2010 12:31
Categories: Employer and Individual Insurance | Legislative and Regulatory Issues | State and Local
Topics: Cost-effectiveness | Employer-Sponsored Coverage | Individual Coverage | Managed Care | Quality | Rates/Reimbursement | Spending | State Data
An analysis by Consumers Union found that non-profit Blue Cross Blue Shield (BCBS) health plans have collected billions in surplus over the past decade while raising health care premiums. The report notes that BCBS plans in 10 states (Alabama, Arizona, Massachusetts, Michigan, New York, North Carolina, Oregon, Pennsylvania, Tennessee, and Wyoming) held a collective $9.1 billion in surplus funds in 2009, or $855 per-member per-year. In 2001, those plans held $4.6 billion collectively, or $395 per-member per-year. The report offers policy recommendations to control and reduce insurer surpluses, including advising states to implement minimum and maximum surplus ranges and forcing insurers to spend excessive funds on state-prescribed expenses.
From the report:
In the last decade, nonprofit Blue Cross and Blue Shield (BCBS) plans have set aside billions of dollars in surplus, even as they raised rates for many customers. Surplus is the excess of a company’s assets over liabilities – essentially a health plan’s retained profits – which plans hold to protect the company and its policyholders and providers from financial losses. Nonprofit BCBS plans, including community-owned charitable plans and subscriber-owned mutual plans, held more than $32 billion in surplus at the end of 2008. Those surplus funds are built primarily with consumers’ premium dollars, and insurers typically include a targeted contribution to surplus in rate increases. Surplus can be used to moderate premium increases, yet we found that some financially strong BCBS plans with large surpluses have continued to seek double-digit rate increases. In our sampling of ten diverse nonprofit BCBS plans, we found that 7 out of 10 of the plans held more than three times the amount of surplus that regulators consider to be the minimum amount needed for solvency protection. In this report, Consumers Union provides background information, analysis and policy recommendations on many of the key issues concerning health insurer surplus.
Full report: How Much Is Too Much: Have Nonprofit Blue Cross Blue Shield Plans Amassed Excessive Amounts of Surplus? (PDF | 1.26 MB) 
How Much Is Too Much: Have Nonprofit Blue Cross Blue Shield Plans Amassed Excessive Amounts of Surplus?
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