Consumers Union claims Blue Cross hoards cash
Posted July 22, 2010 11:56 a.m. EDT
Updated July 22, 2010 1:16 p.m. EDT
RALEIGH, N.C. — 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.