Business
Pennsylvania Blues plans get surplus limits
■ The state insurance department is limiting the amount of excess funds the four nonprofit plans can keep.
By Mike Norbut — Posted Feb. 9, 2004
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The Pennsylvania Insurance Dept. announced in January that it had set a surplus cap on the state's four nonprofit Blue Cross Blue Shield plans, requiring the insurers to keep their excess funds within a prescribed range and seek approval for their surplus levels.
Surplus money deemed to be excessive, which some experts estimate could be hundreds of millions of dollars, would be expected to be used for charitable purposes, either to benefit plan members or the state's uninsured and underinsured population.
The announcement comes after considerable debate about fund levels at the Blues plans, described as the only insurers in the state with a social mission as part of their charters.
Surplus funds between the four plans were estimated at $3.5 billion at the end of 2002.
Meanwhile, insurance premiums have continued to rise, with individual coverage hikes ranging from 3.4% to 40.2% this year, depending on the product and region, according to the insurance department.
The state and BlueCross BlueShield Assn. require a minimum surplus level for a company to operate, and the state set the maximum level at about three times that percentage.
The state's announcement was received warmly by the Pennsylvania Medical Society, which advocated for upper surplus limits during a public hearing held on the topic in 2002.
However, reactions among the four Blues plans -- Capital BlueCross, Highmark Blue Cross Blue Shield, BlueCross of Northeastern Pennsylvania, and Independence Blue Cross -- were mixed as insurers tried to assess the effect the state's announcement would have.
