"Consumers are struggling to afford health coverage," said report author Sondra Roberto, who tackled the project for Consumers Union, publisher of Consumer Reports . "Those funds could be used in some cases to mitigate these rate increases."
The report calls on state insurance regulators to scrutinize surpluses and set maximum limits to protect consumers from unreasonable health insurance costs.
But insurance regulators in Tennessee and BlueCross officials say rate increases here were justified, and keeping enough cash in reserve makes financial sense.
"On the day that financial reform legislation is signed in which many provisions are designed to create deeper reserves for financial institutions, it's ironic that we as health plans are being called out for having strong reserves," said Roy Vaughn, a BlueCross spokesman.
Chattanooga-based BlueCross BlueShield of Tennessee covers 3 million members with 87,000 of those in individual insurance plans. Many others have group coverage through their employers.
BlueCross BlueShield of Tennessee had $1.1 billion in surplus cash last year, an amount roughly five times what would be considered appropriate by regulators to protect insurers from insolvency, according to the Consumers Union study to be released today.
Tennessee's plan was among seven of the 10 states surveyed in which surpluses were more than three times the amounts needed, said Laurie Sobel, a senior staff attorney with Consumers Union. Arizona, Massachusetts, Michigan, Oregon, North Carolina and Wyoming also fell into that category.
Last year, individual policyholders in Tennessee saw average rate increases of 7.7 percent, although some people saw premiums go up by as much as 14.9 percent, Blue Cross officials said. In the group market, the average rate increase was 4.6 percent in 2009 after slightly higher average rate hikes the previous two years here.
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