Why Is Surplus An Important Issue For Consumers?
One out of three Americans with private health coverage is insured by a nonprofit Blue Cross and Blue Shield (BCBS) plan. [3] Those plans held more than $32 billion in surplus funds on their balance sheets at the end of 2008, an average of about $897 million per plan. [4] That represents a sharp increase over levels reported just a few years earlier. The growing amount of surplus, particularly among nonprofit BCBS plans, has precipitated debate about how much surplus protection is adequate and cost-effective and how much surplus is “excessive.” This debate has already begun to bubble up in state legislative and regulatory proceedings. The topic promises to come under even greater scrutiny as the rate review and insurance access provisions of the federal health reform law are implemented and as insurance regulators continue to confront the double-digit rate hikes sought by some plans. All health insurance companies need surplus to reduce the likelihood of plan insolvency and to ensure t
