Rochester, N.Y.— Last month, Excellus BlueCross BlueShield announced it is planning to raise rates for policyholders. The company has filed for rate adjustments for 2012 on its community-rated products. Those generally affect small businesses.
If approved, some will see rate hikes ranging from nine to 13 percent.
Those with high deductible plans could see increases as high as 20 percent.
However, according to a report by the Syracuse Post Standard, Excellus BCBS has about $1.2 billion in reserves. That’s twice the amount the state requires.
An Excellus spokesperson says the company is not going to dip into reserve funds to off set the rates.
In a statement today, Excellus said:
“Reserves are needed for a completely different purpose than lowering premiums. Using them in such a manner would be using a one-shot revenue source to pay for what are on-going and ever increasing costs of health care.
If a health plan – any health plan – uses its reserve funds to hold down premiums in one year, a much larger rate increase would be required the following year because the trends of medical expenses continue to rise.
Having reserves is similar to having a savings account to be drawn upon for unforeseen higher expenses or lower than expected revenues or both. The level of reserves to have is a function of risk.”
There was a mixed reaction to this statement by some Rochester residents.
“It’s obscene,” says Katie Alfieri. “I don’t know what kind of catastrophic event would befall on Excellus that they would need to have that much money on hand.”
Sue Howard disagrees. She understands why companies would want to save money.
“It’s the reality of the business world,” she says. “We just got out of a situation where companies are going under. They don’t want to be in that position so it may be smart to set money aside.”
Excellus BCBS is a non-profit company.
According to the Syracuse Post Standard, Excellus’ rate filing said the proposed rate increases will allow the company to “…achieve a modest operating margin.”