Time to End Huge Surpluses of Nonprofit Health Insurers

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January 9, 2012; Source: Seattle Times | Mike Kreidler, Washington’s insurance commissioner, wrote a guest column for the Seattle Times today arguing that nonprofit health insurers should get no more rate increases until they reduce their surpluses. There are, he argued, 1 million people in Washington state without health insurance, while three nonprofit insurers, Premera Blue Cross, Regence BlueShield, and Group Health Cooperative are holding “more than $2.4 billion above and beyond what they expect to ever pay out in claims.” This, he says is “especially jarring in a state that has cut more than $10.5 million from its own budget, leaving the health care safety net frayed. . . .” Kriedler makes the point that the consumers, who are supposed to be the beneficiaries of these groups, do not have the latitude in their budgets to handle additional increases.

Kriedler’s conclusion? “Nonprofit carriers, particularly, should be held accountable to a larger group of ‘shareholders’—the general public—than publicly traded, for-profit insurance companies are. Before asking consumers to pay more, these nonprofit carriers should be asked whether they have enough profit already.”

Washington is, of course, not the only state where nonprofit insurers hold far more than the recommended level of reserves. In Pennsylvania, Delaware, Colorado, and Massachusetts, among many other states, the issue is being raised. Consumers Union published a study on the issue last year, but there appears to be no standard approach to the limiting of surpluses held by this “very special” type of nonprofit.—Ruth McCambridge