Gold bricks

June 13, 2012; Source: Kitsap Peninsula Business Journal

NPQ has long followed the issue of the lack of caps on the reserves held by nonprofit health insurers. Now Washington State Insurance Commissioner Mike Kreidler is again pushing to be allowed to consider the level of surpluses held by nonprofit health insurers in the setting of premium rates for consumers. We noted Kreidler’s views on this issue when he wrote an editorial for the Seattle Times. Currently, Washington State has a law that disallows such a proposal but Kreidler thinks it is well past time for that law to change, considering that two of the state’s biggest insurers, both nonprofits, are each sitting on surpluses of more than $1 billion.

At a time when people are paying more for their health premiums and getting less, these companies have stockpiled huge assets,” Kreidler is reported to have said. “It’s like trying to ignore an elephant in the room and the elephant’s getting bigger.”

This is the third time that Kreidler has proposed the legislation, however. Kreidler is obviously unhappy with the lack of balance in the equation between the insurance companies and their policyholders, saying that while families are struggling to buy insurance or going without, the insurers are stockpiling cash. That is unacceptable to him. “Some insurance lobbyists like to describe these surpluses as ‘reserves,’” said Kreidler. “That’s simply not true. A company’s surplus is above and beyond what the company has set aside in its reserves.”

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Washington is not the only state where nonprofit insurers hold far more than the recommended level of reserves. The issue is also being raised in Pennsylvania, Minnesota, and Colorado, among others. 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