Consumers Union took a close look at ten nonprofit health plans in our latest report "How much is too much." We found that nonprofit Blue Cross and Blue Shield (BCBS) health insurers set aside billions of dollars in surplus – essentially retained profits – even as they raised premiums for consumers by as high as 20 percent annually. Click here for PDF.

Blue Cross Blue Shield is a household name for most Americans. Since the 1920s, Americans have accessed health insurance through non-profit BCBS plans. Today the brand touts itself as “the largest health benefits provider in America, serving nearly 100 million people in all regions of the country.”

Times have changed. Many of the individual BCBS companies have switched to for-profit status, while even the nonprofits appear to be putting profits before policyholders. Our new report looks at the hoards of surplus dollars sitting in BCBS plans while policyholders struggle with big rate increases and reduced benefits.

Says Betsy Imholz, Director of Special Projects in our West Coast Office:

“Maintaining a healthy surplus is absolutely critical, but this is just too much. These companies know that every time they raise rates, some people simply won’t be able to keep their insurance anymore. People lose coverage and maybe access to needed medical care. If you are sitting on piles of excess surplus, then you should use some of it to make sure your policyholders can afford their insurance.”

Add this to your handy list of reasons to be outraged at insurance companies. Taking just a few examples from the report, research showed that in Arizona BCBS hit consumers with double digit rate increases in 2007, 2008 and 2009 while increasing their surplus to $717.1 million, more than seven times the amount that states typically require to protect against insolvency. Health Care Services Corporation seems to be flush as well, but wasn't shy about raising rates in Texas, Illinois and New Mexico.

What’s worse is during the time these non-profit BCBS plans were raising rates and stockpiling record surpluses, families with Blue Cross coverage wrote into us describing unrelenting premium increases. Bonnie from South Wilmington, IL says that her BCBS health insurance now eats up one-fifth of her monthly salary. And for some folks like James of Oak Forrest, IL these premium increases have forced them to cut benefits.

The report highlights much of the abuse but we’re definitely not done yet. Have you had a major health insurance rate increase? Tell us your story so we can hold companies accountable for the rates they charge in light of the surpluses they keep.

comments (13)

Comments

1 Posted by Margaret L Brown at 07/25/10 07:08 PM

My aunt was just denied payment for her wheel chair under Tenn Blue Advantage. Now I hear about the Blue companies huge surplus of funds, primarily from their high premiums.
What I would like to know is how many of their blue advantage claims get denied,what per cent get appealed by the( mostly eldery sick people) and what % of these get approved ( reversed)on 1st appeal, second appeal or ever?
I believe after reading my elderly aunts denial for her wheel chair that much of the Blue Advantage surplus may come from denied medial claims that the elder do not appeal or are ever reversed. Reading an appeal letter seems to need and interpretation letter by a Philadelphia lawyer. If nota lawyer , others with Medicare- CMS expereince, plus the rules states allow these large companies to set up for themselves that limit coverage than regular Medicare/CMS regs?
Does the Consumers Union or anyone know these figures in Tenn?
Thank you , A bewildered niece of a Tenn Blue Advantage covered elderly sick Aunt.

2 Posted by Kim Winters at 08/03/10 11:22 AM

I had dental surgery that was covered by my very good dental plan, Delta Dental of PA. During the surgery the doctor found a cyst and had it sent out for biopsy. BCBS of Georgia denied the lab fees saying that is was not covered under my plan. I called them and said that the cyst did not show on the pre-op xrays. They told me to file an appeal, which I did and had the surgeon write a letter stating the necessity of the procedure. It was denied. I was responsible for the labs fees. It is ridiculous considering how much my husband and I pay for health insurance to be denied twice.

3 Posted by Chris at 08/03/10 11:47 AM

I am a performing artist. My income is modest and not regular. Growing up in Germany, I've never lived without health insurance, until I came to the US and left my day-job behind. Now I can put my full time and creative energy into my art. However, the existential dread of being injured or falling into ruin due to possible health treatment, is truly a hardship.

I have high hopes for our Health Care Reform, and I've been working to support its passage.

Now, looking at the new government website, I find, indeed, more options. But affordable???

Let's look at the lowest option for one healthy individual like myself (51 years old) here in Maryland:
$97 per month, and a $10,000 annual deductible? Plus the restrictions and $30 co-pay and not favorable prescription drug coverage. That's NOT what I call affordable.

Let's look at an option in the middle, with a $1,200 annual coverage (this would be what I might spend out of pocket, once a month going to a chiropractor or massage therapist; services which might not even be counted towards my deductible). Then my monthly insurance fee is in excess of $400. That's an $4,800 annual insurance expense plus the $1,200 is $6,000, which makes it $500 per month to pay, without having paid yet any other expenses for a possible doctor's visit. Again, the reality is, this is NOT affordable for me as an artist. Maybe in one month, but throughout the economic ups and downs of a booking year? -- This just doesn't reflect the reality of many of us creative workers.

Granted, if I just buy "insurance" against calamity (getting hit by a truck, falling off a ladder), I might be a bit better off (after going in debt for at least the $10,000 deductible on my credit card). But does that answer my desire for preventive health care, all the other good and healthy living choices that you so rightly advocate, and that I subscribe to?

I don't smoke, I drink moderately, I eat little meat, pay some extra dollars for organic produce, I'm not overweight -- I'm already ahead of the curve of the average population. -- But can I afford a regular mammorgram? Pap smear? Colonoscopy? With a doctor who I can build a continuous relationship with? Still no to all.

Please give us hard-working folks, who are at the lower end of the income spectrum some true choices, and don't use the word "affordable" as a fig leaf.

4 Posted by Bill at 08/03/10 12:39 PM

ALL private healthcare should be NON-PROFIT!

These facts presented in this article give reason as to why this should be the LAW!

5 Posted by Douglas McNeill at 08/10/10 12:07 PM

I was not allowed to send an email, even tho I live in Maryland, one of the states being targeted for the campaign.

6 Posted by Hoyt Hillman at 08/10/10 02:19 PM

DeAnn Friedholm's article is true, but the power of Blue Cross / Blue Shield in many states is the lack of competition. In many states, BCBS has bought or marketed again their competition with less than fair practices often with the knowledgeable help of the state insurance commissioners or legislators and created near monopolies.

In many states they abuse their "Not for Profit" status. BCBS is able to negotiate as much as 10% lower reimbursements for Hospital stays than other insurance companies.
If you want to wage a campaign to educate, start sending consumers and lobbyists to the insurance oversite committee in state legislatures. They can help create a more level playing field. That's about the only group that state insurance commissioners listen to.
Retired health care adviser

7 Posted by Beth Ann Anderson at 08/10/10 05:26 PM

I need HELP, yesterday! I was born with s birth defect called spina bifida. I have had 17 surgeries thus far. I was on my father's insurance during most of these. I continue to suffer from effects of the birth defect. I'm on a lot of meds, and require ostomy supplies and diabetic supplies. I retired due to health issues after working 28 yrs at a hospital. Between my retirement, & my disability checks, I make slightly over $1600 a month. I phoned Medicare to find out about D, after receiving A & B, due to disability. I was told, my 1st month installment would be $1500 for ONE month. When I applied for Medicaid, I was turned down I have NO idea why. I cannot afford to LIVE anymore!! Does ANYBODY understand that??????

8 Posted by Richard Fryling at 08/11/10 01:05 AM

My wife and I are both on social security and she suffers from dimentia and is no longer able to work . I have a part time job paying minimum wage in order to supplent our monthly SSI but our total income is just barely covering our fixed expenses and the increases in premium and copays is rapidly approaching the point of our being forced to drop our supplemental coverage. If we can't afford our supplemental coverage, there is no way we can cover the cost of what Midicare doesn't cover which means we effectively have no health coverage at all. Your hoarding of cash reserves way beyond what is needed to cover claims and still show a respectable profit and I would ask you to examine your true needs and eliminate the excessive inceases. If you are unwilling to take care of your insureds, We will have no alternative than to request government regulation of your business. I am not a big fan of goverment involment in businee. but failure on you part to act respsibly will leave us with no alternative. Dick Fryling, concerned customer

9 Posted by Nick Dietz at 08/11/10 01:05 PM

Trying to point out which health insurance company is the worse one is like trying to point out which pimple on your ass is the ugliest. They all are pimples on your ass!! All health insurance companies have conspired to screw over the American people, and the politicians have allowed them to do it. Why else would the congress not offer a single payer government run system? What puzzles me are the number of average income Americans who take the side of the insurance companies against the public interest????

10 Posted by Brad Thibodaux at 08/18/10 10:57 AM

The fact that Blue Cross in most states can negotiate larger discounts from health care providers is viewed as a negative? It's called competition. Perhaps that's why Blue Cross' rates are more competitive tha other companies. Based on some of these responses, you would think that making a profit is somehow wrong. If your employer did not make a profit, how long would you have a job. I guess people would prefer that the government controlled every business and every aspect of our lives. That's called socialism. If 51% of the people depended on 49% of the people to provide for their needs, the economy would fail. We're headed in that direction now and some people are too blind to see it coming.

11 Posted by Blake Hutson at 08/18/10 12:14 PM

Brad - just to be clear, our report was about non-profit Blue Cross Blue Shield plans building up surplus amounts far above the required amounts. Your comment about making a profit seems to apply to for-profit plans.

12 Posted by a doctor at 08/23/10 02:42 AM

Blue Cross Blue Shield and Newton Wellesley Hospital failed to diagnose, treat or contain my priest abused sister for many years in Boston. She was left psychotic and suicidal for years in the streets. Time for an accountable system with single payer funding and health courts.

13 Posted by DeWayne Rhudy at 08/25/10 03:53 PM

I know CU is trying to look out for the consumer and thus supported Obamacare. Is this issue addressed in Obamacare and if so how?