The Philadelphia Inquirer headline was ominous:
Independence posts 2015 loss of $54.4 million
“Independence” is Independence Blue Cross, one of the largest health insurers in the country and the dominant insurer in the Philadelphia region. Overall, the company insures nearly ten million people (a quarter of them in the Philadelphia area) in 27 states.
Could this be a disaster in the making? Another victim of the dreaded Obamacare?
While the company’s CEO seemed nonchalant about the losses, referring to them as “bumps in the road” – although he did imply that he’s overpaying hospitals, as if that’s hospitals’ fault and not his own – its CFO attributed the losses to, among other things, people who need a lot of medical care (the nerve of those people, using their health insurance to try to get health care!).
But what the newspaper didn’t report, and what you have to dig deep, deep, deep into the company’s annual report to find, is that the $54.4 million in losses left Independence Blue Cross with a surplus of $2.7 billion.
Of $2.7 billion. (On top of “reserves” – an entirely separate slush fund – that it practically requires a court order to get insurers like Independence Blue Cross to disclose but that easily exceed $1 billion.)
Which means a $54 million loss amounts to just two percent of that surplus.
That surplus of $2.7 billion.
For a non-profit company.
But by getting the story out, the company laid the groundwork for bumping up its rates in the coming year.
To compensate for what amounts to little more than a rounding error.
And probably some bad management as well.
Well, now we know at least one reason our health insurance is so expensive: because companies like this one grossly overcharge us and then pay their executives huge salaries and sit on the rest for a rainy day that will never, ever come.