Nonprofit status at risk for Pennsylvania insurers

Two Pennsylvania lawmakers are questioning the status of the state's four nonprofit insurance companies as insurers of last resort--a decision that might result in the companies having to invest more of their reserves into the community or losing their nonprofit status.

The state senators may soon review the charitable missions of the nonprofit insurers, all of which are Blues plans--Highmark, Capital Blue Cross, Independence Blue Cross and Blue Cross of Northeastern Pennsylvania, reported the Pittsburgh Tribune-Review.

They would be following in the footsteps of Michigan, which just converted its largest insurer, Blue Cross Blue Shield of Michigan, into a nonprofit mutual insurance company, removing its status as insurer of last resort, FierceHealthPayer previously reported.

"Insurer of last resort is their essential purpose," state Sen. Michael Stack told the Tribune-Review. "The way they do business, the way they function, will clearly change" under healthcare reform. "It's something that absolutely lawmakers should take a look at."

Part of the concern is the insurers have accumulated reserves of more than $7 billion as of last December but have only spent $1.1 billion in charity since 2008, about 75 percent of which was allocated to subsidize their own plans. What's more, the four Blues plans' proposed charitable spending for 2013 amounts to less than 1 percent of their combined revenue from 2011. 

State Sen. Don White says to justify their nonprofit status, the four insurers should financially invest in their communities. "With Highmark sitting there with $4 billion in reserves, that could solve a few health care issues," White said, adding that he would consider dropping the insurers' nonprofit status, if needed.

Highmark, the largest insurer in Pennsylvania, said it plans to subsidize $87.1 million between July 2012 and June 2013 for people who can't obtain coverage elsewhere, as well as continue investing in improving community health.

"Our nonprofit status allows us to put the needs of our members and local communities first," Highmark spokesman Aaron Billger told the Tribune-Review. "Although the insurer of last resort role and current way Highmark contributes to the community may change, Highmark will continue to make very significant investments in community health and welfare."

To learn more:
- read the Pittsburgh Tribune-Review article

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