May 20, 2005 – A California consumer rights group is calling on state officials to require insurance companies to justify their overhead costs and to refund some reserves, following the revelation that two insurers have enough surplus money in holdings that they could pay for one year of health insurance for 52 percent of the state's currently uninsured residents.
The Foundation for Taxpayer and Consumer Rights (FTCR) released an analysis Wednesday of the excess reserves held by California's top seven health insurance companies. The two largest insurers, the Kaiser Foundation and Blue Cross, have combined excess reserves totaling nearly $11 billion -- enough to cover an estimated 3.6 million Californians.
The analysis comes as state regulators investigate Blue Cross for significantly raising rates in the wake of a recent merger.
FTCR also called on California's Attorney General Bill Lockyer to look into Kaiser's nonprofit status, considering its massive reserves.
"Blue Cross's and Kaiser's excessive reserves and unnecessary premium increases are symptomatic of an unregulated and uncompetitive health care market," said FTCR's Jerry Flanagan.