Many not-for-profit Blues plans hold cash reserves in excess of minimum regulations, as they continue to raise member premiums, according to a new report by Consumers Union.
Many not-for-profit Blues plans hold big surpluses, Consumers Union says
An analysis of 10 Blues plans indicated that seven out of the 10 plans held reserves more than three times the minimum required to maintain solvency protection. Not-for-profit Blues plans held more than $32 billion in surplus funds on their balance sheets at the end of 2008, or about $892 million per plan, according to the report.
Blues plans in Arizona, Oregon, North Carolina, Tennessee and Wyoming, for instance, held reserves in 2009 more than three times the minimum benchmark set by the National Association of Insurance Commissioners, according to the report. Health Care Service Corp., which operates plans in Illinois, New Mexico, Oklahoma and Texas, held a surplus five times the minimum requirement.
Bob Kolodgy, chief financial officer of the Blue Cross and Blue Shield Association, said in a statement that because not-for-profit plans don't have access to capital markets, they rely on reserves to make investments to better serve members.
“To suggest that reserves should be reduced now, at a time when healthcare reform has created an untested and uncertain environment, would be reckless,” Kolodgy said in the statement.
Consumers Union recommends in the report that insurers' reasons for a surplus, including business development, “should be transparently presented and weighed against the necessity to keep premiums affordable.”
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