December 29th, 2008

In an editorial titled “Blue Cross gives; consumers bleed,” the Times-Tribune writes on what Blue Cross of NEP is doing with their budget surplus:

Blue Cross of Northeastern Pennsylvania walks a fine line between healing and hurting as it continues to distribute scores of millions of dollars from its massive surplus to health care institutions and initiatives in Northeast Pennsylvania.

Whether the company can do so is a settled matter, in that the state Insurance Department already has found that the surplus may be used for health care initiatives. Whether the company should do so remains open to debate.

Blue Cross plans to donate $9.6 million from its $381 million surplus to Mercy Hospital, which the hospital will use to improve its emergency room, enhance its professional recruitment efforts, install an electronic records system and make physical improvements to its buildings.

All of those are worthy initiatives. They also are in keeping with other important contributions by Blue Cross to regional health care initiatives, especially $45 million that is vital for the development of the Commonwealth Medical College in Scranton.

Such contributions also work to enhance Blue Cross’ regional business operations by strengthening its ties with health care providers. The question of why the company should be allowed to exponentially raise premiums, while accumulating surpluses well beyond what it needs to cover claims, never has been answered satisfactorily by the company or state regulators. Contributions to medical institutions are helpful, but lower premiums that would result in access to coverage for more regional residents also would improve the system.

The tax-exempt company’s contributions to health-care institutions with which it does business also calls into question, again, the presence on its board of state Sen. Robert Mellow, whose presence in that capacity could well serve as the insurance company’s own insurance against a more aggressive state regulatory posture.

The Legislature should draw much clearer lines on this issue.