Over the past decade, nonprofit Blue Cross and Blue Shield (BCBS) health insurers across the country stockpiled billions of dollars in surplus--while raising premiums for consumers by as high as 20% annually, according to a report from Consumers Union released Thursday.
Surplus funds, which are built primarily with consumers' premium dollars, can be used to moderate premium increases. However, Consumers Union said in its report, How Much is Too Much, that some of the financially strong BCBS plans with large surpluses have continued to seek large rate increases.
Nonprofit BCBS plans, including community owned charitable plans and subscriber owned mutual plans, held more than $32 billion in surplus by the end of 2008, according to A.M. Best.
In particular, a Consumers Union sampling of 10 diverse non-profit Blues plans found that seven of the 10 plans held more than three times the amount of surplus that regulators considered to be the minimal amount needed for solvency protection.
"These Blue plans hit consumers with big premium hikes while they've built up enormous surpluses," said Sondra Roberto, Staff Attorney for Consumers Union, 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."