BCBS Nonprofit Defends Health Insurance Surplus
According to a shocking report from Consumers Union, seven out of ten BlueCross BlueShield non-profit health insurance providers withheld at least three times as much as what is required of them to have on hand by law. This comes after double-digit premium hikes in the past decade.
The law requires a certain amount of money be on hand for minimal solvency. The reserve level is set by the National Association of Insurance Commissioners. Arizona held seven times the reserve level. Premium health insurance rates in Arizona for individual members increased 14% to 19% in 2007; 13%-15% in 2008; and 8-18% last year. Alabama reserved 2.5 times the reserve level.
One in three Americans who have private health insurance have a BlueCross BlueShield nonprofit health insurance plan. For the 9.5% of Americans that are out of work, nonprofit health insurance plans are usually the only affordable option. However, many are now wondering if they are being gouged.
One important thing to note is this: nonprofit health insurers don’t have access to capital from the free market and so, says industry leaders, they need to keep more on hand than for-profits do. But how much is too much? And how much is not enough?
According to BlueCross BlueShield Association of Chicago’s CFO, Bob Kolodgy, if just half of enrollees had one extra emergency room visit, that surplus would be used up. So while the numbers may be shocking, it may also be necessary for these nonprofits to survive in the economy and to keep offering affordable health care insurance to more and more members.
Some are questioning the purposes of the surplus. If the companies are not using it to maintain solvency, there are other uses for the money. Consumers Union said the plans with extra cash should issue direct refunds to consumers, set up a rate-stabilization fund, or to channel it back into charitable work such as community-health programs or affordable coverage initiatives.
It is reports like these that fuel people’s mistrust of health insurance companies. It is also what helped President Obama garner support for health insurance reform. As millions of Americans are faced with unemployment and no idea where or when they can get a job and employer-supplied insurance, this concern will remain in the public eye.