Health Insurer Cries “Wolf”

Last week a company called Highmark, which is a Blue Cross health insurance plan that serves 5.3 million people, mostly in western Pennsylvania but also in Delaware and West Virginia, claimed it lost $318 million last year on customers who bought its policies through Obamacare.

So right away, you know the people who run Highmark aren’t very smart because they priced their health insurance too low.

You also know they’re not too bright because they bought a western Pennsylvania hospital chain that bleeds money like a hemophiliac in a cactus patch.

The company’s revenue in 2013 was $15.8 billion. Last year it rose to $16.7 billion – an increase of nearly a billon dollars.

But apparently, this company that brought in $16.7 billion last year plans to turn to the federal government for help defraying its $318 million loss.

Surely, though, Highmark has socked away a little money for a rainy day, right?

So glad you asked.

You see, the company has $6.5 billion in cash on hand.

Cash on hand. $6.5 billion.

And $5.4 billion in reserves.

Yes, $5.4 billion in reserves in addition to the $6.5 billion in cash.

Those are not misprints: $6.5 billion and $5.4 billion.

Why so much money hidden in the mattress?

Well, the Blue Cross home office requires all Blue Cross licensees to hold onto obscenely massive reserves in anticipation of a possible rainy day, so they’ll still have cash to pay out legitimate member claims if times get tough.

So the company had one of those rainy days – actually, a rainy year – and lost $318 million.

Through just one of its lines of business.

And through every fault of its own.

Its other lines of business, other than the bleeding hospitals, are making money hand over fist.

So subtract the $318 million from the $5.4 billion in cash reserves and that still leaves Highmark $5.1 billion in cash reserves.

In other words, more than enough for many, many more rainy days and many more rainy years.

greedyBut that’s not going to stop the company from asking the federal government to help with its – under the circumstances – negligible loss.

And not to stand idly by while its $5.4 billion reserve trickles away at a rate that would deplete it after, oh, about twenty years, Highmark intends to raise its premiums twenty-five to thirty percent for 2016.

Oh, and one more thing:

Highmark is a non-profit company.

You have to wonder how many people Highmark has overcharged over the years to amass a cash stockpile of $6.5 billion and a rainy day fund of $5.4 billion.

And still have the audacity to insist that it’s “non-profit.”

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  • […] No, all of those people, the corporate employees whom the corporate executives care most about, are safe, so the doctors alone – the people who do the real work in helping the company to its vast profits – bear the brunt of the burden of the failure of others. And about those profits: The Curmudgeon has written about them before, and they are enormous; see that description here. […]

  • By Penny-Wise, Pound-Foolish | The Four-Eyed Curmudgeon on December 3, 2018 at 6:06 am

    […] for help – one of those Blue Cross plans The Curmudgeon has written about in the past.  (See here,here,here,here, and […]

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