Republished courtesy of Kaiser Health News and the Seattle Times
March 12, 2012 -- Two of Washington's three largest health insurers reported gains in surplus cash in their annual reports to the state insurance commissioner, whose bid for authority to consider company surpluses before approving rate increases died in this year's Legislature.
These companies, all nonprofits, refer to the money not earmarked to pay claims as "reserves," and argue it is needed to beef up computer systems, cope with changes in health-insurance laws, and other contingencies.
Insurance Commissioner Mike Kreidler says he wants companies to have reserves for unexpected claims, but argues that what these companies have amassed goes far beyond what might be needed. Unlike for-profit companies, he says, these nonprofits have no shareholders to demand the companies give them dividends or do something else with the money.
According to the reports filed with the insurance commissioner,
Premera Blue Cross made $119 million last year and reported an
increase in surpluses from $879 million in 2010 to $972 million in
2011, nearly 11 percent more.
Regence BlueShield lost $10 million on its insurance business after factoring in investment income and sale of a building for $51 million, but boosted its surplus by nearly 4 percent, from $956 million to $994 million.
Group Health Cooperative lost $14 million, and took $82 million from surplus to fund a pension liability for workers. That helped bring the surplus down from $605 million in 2010 to $482 million in 2011.
Group Health, a health-maintenance organization, not only operates as an insurer but as a provider, employing various types of health-care workers.
All three companies have also lost customers over the past decade.
Group Health experienced the smallest losses, dropping from 444,375 members in 2002 to 356,656 last year, a nearly 20 percent reduction, but that slide appeared to stabilize between 2010 and 2011.
Premera lost 26 percent of its members over the decade that began in 2002 with 912,444, but gained 20 percent from 2010 to 2011, finishing that year with 674,246 members.
Regence lost the most members, going from a high of 1,017,729 members in 2002 to 599,849 last year, a 41 percent drop.
Curt Fackler, a former insurance-commissioner candidate who has been critical of surplus accumulations, notes that the amount of surplus carried by each company per member has grown dramatically for all the nonprofit insurers. In 2002, it was in the $300 to $400 range; by last year, it tripled or nearly quadrupled.
Kreidler said that as more families struggle to pay for health
insurance, "these large and growing surpluses are increasingly
questionable."
During hearings for the bill, SB5247, insurance-company
representatives argued that their surpluses were necessary to absorb unexpected expenses generated by national health-reform legislation. They also said such legislation would weaken them at a time when for-profit companies are becoming more prevalent across the country.
Even though his bill died this year (in the Senate Rules Committee), Kreidler said the issue isn't going away.
"Consumers are clearly paying more attention to this issue — as they should. And it looks like in most cases, the already-large surpluses are continuing to grow."
Image for this story appears courtesy of Flickr user seiuhealthcare775 under a Creative Commons attribution license.
