Two nonprofit health insurers in Washington State have accumulated record surpluses of more than $1 billion, causing the state's insurance commissioner to sound the alarm.
According to the most recent quarterly filings with office of the insurance commissioner, Premera Blue Cross has a surplus of $1,015,692,693, while Regence BlueShield's surplus reached $1,048,103,555. The insurers are two of the largest in the state.
In a press release, Insurance Commissioner Mike Kreidler blasted the surpluses, saying “At a time when people are paying more for their health premiums and getting less, these companies have stockpiled huge assets."
Kreidler has proposed legislation in the past to consider surpluses when reviewing rates. Current state law requires the insurance commissioner's office to ignore them when going over proposed premiums from insurers. The most recent attempt at changing this law was Substitute Senate Bill 5247, which failed to come out of the Senate Rules Committee earlier in the year. Kreidler says he intends pursue this legislation again next year.
“Families are clearly struggling to afford insurance,” said Kreidler. “More than a million Washingtonians have no health coverage at all. Yet very few people know how much these nonprofit health insurers are sitting on.” Kreidler went on to dismiss some insurers' claims that these surpluses are actually reserves, saying that the money is "above and beyond" what the company has set aside.
In a statement, Regence BlueShield defended its surpluses, saying they are needed as a safety net to protect its members against unknown risks and costs. Premera Blue Cross spokesman Eric Earling gave a similar reason, reasoning that the money is needed to pay claims and invest in new technology. He also reasoned that the money is needed since nonprofit health plans don’t have access to equity markets or other forms of capital.
“It’s ironic [Kreidler] is continuing to advocate that idea given that all three local health plans in Washington lost money in the individual market in 2011. Meaning, they’re already drawing on reserves to balance those losses,” said Earling.
Both Premera Blue Cross and Regence BlueShield have seen their surpluses grow since 2000. Regence had a surplus of close to $400 million that year, while Premera had nearly $300 million.