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Pennsylvania Insurance Commissioner Diane Koken earlier this month approved the reserve and surplus levels maintained by the states four Blue Cross-Blue Shield plans, but at least one Blue has expressed unhappiness with the ruling.
And some groups representing consumers and employers condemned Kokens ruling, calling the surplus levels she set too high. They argued in public hearings held by the insurance department that the companies should reduce their surpluses by cutting health care premiums paid by employers and individuals. They also charged that the ruling was part of a behind-the-scenes deal between the Blues and the governors office.
In financial terminology, a surplus is the difference between a companys assets and its liabilities.
The BluesHighmark Inc., Pittsburgh; Independence Blue Cross, Philadelphia; Capital Blue Cross, Harrisburg; and Blue Cross of Northeastern Pennsylvania, Wilkes-Barrehad total surpluses of about $4 billion in 2003, according to the DOI.
Under pressure to force the companies to reduce their surpluses, the DOI developed a new model to analyze the companies surplus levels.
"The levels used in the model are lower and more stringent than any threshold for excess surplus in the country based on risk-based capital," Koken claimed in announcing her decision. "Our analysis of these surplus levels was extremely thorough and truly unprecedented in its scope."
The findings showed no inefficient or excessive surplus for any of the four companies, Koken concluded.
