SEATTLE (AP) — Two large nonprofit health insurers in Washington state now have a total of more than $2 billion in surpluses, according to Mike Kreidler, the state’s insurance commissioner.
Premera Blue Cross and Regence BlueShield each has a surplus of more than $1 billion, according to filings for the first quarter. That’s more than what the companies are required to set aside in reserves, Kreidler said.
“They’re building up a financial cushion for themselves, and it comes at an expense for people,” Kreidler said. He said the insurers should use some of the surplus money to reduce rate increases for policyholders.
“These aren’t reserves,” Kreidler said. “They’re financial surpluses.”
Eric Earling, a spokesman for Premera Blue Cross, said the surplus money is needed to ensure that the company can pay claims and invest in new technology and service capabilities. Unlike private insurers, not-for-profit ones can’t sell stock or bonds to raise capital, so they need to set aside money, he added.
Premera also needs the surplus to handle the cost of implementing the Patient Protection and Affordable Care Act (PPACA), he said.
Premera has 1.5 million members in Washington and Alaska, and the money amounts to about $700 per member, Earling said.