State News

Consumers Union claims Blue Cross hoards cash

Posted July 22, 2010

— A national consumer advocacy group is criticizing Blue Cross health plans for raising rates while sitting on big cash reserves.

Consumers Union said Thursday that seven of the 10 non-profit Blue Cross plans it examined stashed away more than three times the amount of money regulators require to make sure claims can be paid.

The publisher of Consumer Reports magazine says Blue Cross plans should be forced to tap that cash before state regulators approve rate increases.

“These Blue plans hit consumers with big premium hikes while they’ve built up enormous surpluses,” Sondra Roberto, staff attorney for Consumers Union, said in a statement. “These rate hikes could have been reduced or avoided if companies applied just a portion of their surplus to rate stability, while leaving sufficient funds for solvency protection.”

Blue Cross Blue Shield of North Carolina spokesman Lew Borman says the company is following state law requiring health insurers to keep up to six months' worth of costs in reserve.

Roberto said that some of the surpluses "go well beyond the minimums that states require."

“Insurance premiums shouldn’t keep going up year after year when insurers are hoarding such huge surpluses,” she said.

Also examined were plans in Alabama, Arizona, Massachusetts, Michigan, New York, Oregon, Tennessee, Wyoming and northeastern Pennsylvania.


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  • whatusay Jul 22, 2010

    Obama has everyone believing that making a profit is evil. But he has taken over most of these evil corporations and they are not hiring any more, in fact they are laying people off.

  • carrboroguy Jul 22, 2010

    Some math may be in order here--blue cross in nc has almost 4 million members! By my calculation, if a pandemic caused an unexpected 8% to be hospitalized at a cost of $5000 each, bcbsnc's 1.4 billion in reserves would be gone. Then blue cross would be considered to have had recklessly low reserves! It's tempting to jump to the conclusion that 1.4 billion is a ridiculously high number if you don't understand the scale. Also don't incorrectly assume that reducing its reserve would have a big impact on your bills--do the math!

  • Sophie Lowe Jul 22, 2010

    Don't like BCBS? Go somewhere else. It is still a free country, at least for today!

  • Made In USA Jul 22, 2010

    Not-for-profit my tail. Someone I knew a while back said that "books are balanced" to show not for profit. Call it spending wisely if you want.

  • odell Jul 22, 2010

    BCBSNC has no shareholders. The company is not a traded stock.

  • dmccall Jul 22, 2010

    No way. Really? (I am a DDS, and you would not believe how many reimbursement checks for work done in the fall seem to get held until after Jan 1 each year.)

  • cbarnett Jul 22, 2010

    Sure, they can do what they like but our company has been hit with a ridiculous rate increase this year SO we're switching providers. Take that, BCBS

  • jgriffith3792 Jul 22, 2010

    Wow so much misinformation its amazing. First of all BCBSNC is not-for-profit and not a non-profit which basically means proceeds (profits, reserves, earned income from investments, etc.) are re-invested or used to pay administrative costs; non-profits typically provide a service and/or product for which they are not paid - big difference. Second, the reserves required are governed and monitored by the state-go to the NCDOI web page and look it up. BTW, the reserves BCBSNC maintains are roughly $1,000 per member. Third, whether you like it or not this is still (for the moment) a capitalist society, so yes, they (and all other businesses) are in it for the money - good or bad.

    You think its bad with BCBSNC? Wait until its all controlled by gov't. A lot of folks on here will be begging for BCBSNC.

  • Bendal1 Jul 22, 2010

    BCBS' excess funds aren't "profits", they are a reserve. How much they specifically have is grounds for debate, but if this money was a "profit", it would have been given out to shareholders, not stored away in a bank somewhere.

    I'm wondering if BCBS isn't building up a bigger than normal reserve because they know some of their investments are questionable (think CD notes) and want more cash on hand in case they collapse.

  • clayt85 Jul 22, 2010

    I'm so glad Slip Kid has absolutely zero understanding of what state regulators do or why they require a certain level of reserve funds to be held by an insurance agency... Yet still manages to use his lack of information in an attempt to substantiate his false beliefs about the government's involvement.