SEATTLE – Two of the largest nonprofit health insurers in Washington are sitting on record surpluses at a time when policyholders are paying more for their insurance premiums, the state’s insurance commissioner said.
Premera Blue Cross and Regence BlueShield each now have surpluses of more than $1 billion, according to their most recent filings for the three months that ended in March. That’s more than what they are required to set aside in reserves, Insurance Commissioner Mike Kreidler said Monday.
“They’re building up a financial cushion for themselves, and it comes at an expense for people,” Kreidler said, adding that insurers should use some of that surplus money to reduce rate increases for policyholders.
Eric Earling, a spokesman for Premera Blue Cross, said the surplus money is needed to ensure the company can pay claims and invest in new technology and service capabilities. The reserves also are critical to manage increased costs caused by federal health reform, he added.
In a statement, Regence BlueShield said its capital reserves provide a safety net for members against unknown risks and costs and money needed to finance initiatives. Using such money to buy down rates promotes a false impression of reducing health care costs; the cost of health insurance goes up because medical costs go up, the company said.