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Blue Cross plans boost rates despite surpluses, report says

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PJ staff report

Nonprofit Blue Cross and Blue Shield health plans over the past decade amassed billions of surplus dollars at the same time they were boosting premiums for consumers by as much as 20 percent a year, a new report says.

Consumers Union, which prepared the report, recommends that state insurance commissioners scrutinize the surpluses, or “retained profits,” that Blue Cross plans have collected and “crack down on skyrocketing rate increases,” Sondra Roberto, staff attorney for the group, says in a statement.

Insurers hold surplus, or the excess of assets over liabilities, to protect the company and its members from financial looses.

The report, “How Much is Too Much: Have Nonprofit Blue Cross Blue Shield Plans Amassed Excessive Amounts of Surplus?,” found seven of 10 nonprofit Blue Cross Blue Shield plans it looked at held over three times the amount of surplus that regulators consider to be the minimum amount needed for solvency protection.

Insurers build those surpluses mainly with premium dollars from consumers, and they typically include a targeted contribution to surplus in rate increases, Consumers Union says.

While surplus can be used to moderate premium increases, it says, some financially-strong Blue Cross Blue Shield plans with big surpluses have continued to seek double-digit rate increases.

“Maintaining a healthy surplus is absolutely critical, but some of these insurers have large surpluses that go well beyond the minimums that states require,” Roberto says. “Insurance premiums shouldn’t keep going up year after year when insurers are hoarding such huge surpluses.”

Consumers Union recommends that state insurance commissioners examine the surpluses, develop appropriate ranges for minimum and maximum surpluses, and reject or reduce rate increases.

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