Excellus Blue Cross Blue Shield has come under fire for proposing rate hikes, which could increase as much as 20 percent for some plans, even though it has enough funds in its reserves to cover claims.
Despite its $1.26 billion in reserves--almost twice as much than New York law requires--the Rochester, N.Y.-based insurer has proposed to contribute roughly $6 to as much as $37 a month from some members' premium payments to its reserves, reported the Syracuse Post-Standard.
"It's a disservice to consumers that they're (Excellus) not using their reserves to defray some of the proposed rate increase," Elisabeth Benjamin, an attorney and cofounder of Health Care for All New York, told the Post-Standard. "We would submit the state should not permit the rate increase to further allow this carrier to stockpile its reserves."
Excellus says it shouldn't use reserves to offset its proposed rate increases that would affect 90,000 members. "These reserves are the 'insurance' that assures payment even when costs run higher than anticipated, or emergencies or disasters occur and should not be used as an alternative fund to temporarily reduce rate adjustments," Excellus said in documents filed with the state Department of Financial Services.
Excellus responded to some of the pressure by explaining to WHEC that dipping into reserves to artificially lower premium increases isn't an effective solution, akin to "using a one-shot revenue source to pay for what are ongoing and ever-increasing costs of healthcare." What's more, the insurer said, using reserve funds to hold down premiums in one year would result in a much larger rate increase the following year to compensate for medical inflation and trend costs.
To meet the state reserves requirement of $703 million wouldn't give Excellus enough of a cushion to cover its 2 million members. "That's like saying to someone that they should strive to have a minimum amount in their savings account, but that might not be enough if suddenly they need to cover large unforeseen expenses," Excellus spokeswoman Elizabeth Martin said.
Plus, Excellus's $792 per-member reserve, which would cover claims for about three months, is less than other similar insurers' reserves, which average about $1,179, she added.