Nonprofit Insurance Giant Hoards Millions in Surplus Cash
By Jemma Weymouth, July 28, 2010
Is it fair for nonprofit health insurance plans to increase customer rates when they’re hoarding millions in surplus cash?
Health insurance costs continue to rise, hitting consumers with high premiums and co-pays despite the downturn in the economy. Adding insult to injury, a new report from Consumers Union (a Burness client) has found that over the past decade, nonprofit Blue Cross and Blue Shield (BCBS) health insurers accumulated vast amounts of surplus cash. Meanwhile, these same plans haven’t cut rates for customers. In fact, many have continued to increase rates, ratcheting up premiums by as much as 20 percent annually.
Insurers need a cushion to protect them from insolvency. But these BCBS plans set aside billions of dollars of surpluses—essentially retained profits built primarily with consumers’ premium dollars—that instead could have been applied to keeping costs down.
Nonprofit plans have a mission to provide the most affordable care they can. The report urges BCBS plans with extra cash to offer customers a refund; set up a rate stabilization fund to moderate premiums going forward; or spend the excess money on charitable purposes like community health programs.
What do consumers think? If the comments on this USA Today article are any indication, their reactions range from outrage to contempt and resignation.
Read the report, “How Much is Too Much,” here.
