January 13th, 2009

Today the Times-Tribune features two more installments to its series on the PA Blues, and the arguments surrounding their business practices– especially on what the Blues should do with their huge monetary surpluses.

In an article titled “As nonprofits, what is Blues’ social mission?,” Daniel Axelrod writes:

“Critics argue the four nonprofit insurers — Blue Shield operator Highmark Inc. of Pittsburgh, Capital Blue Cross in Harrisburg, Independence Blue Cross in Philadelphia and Blue Cross of Northeastern Pennsylvania in Wilkes-Barre — are charitable organizations.

They contend the insurers should donate the bulk of their $6.2 billion, as of 2007, collective surplus to offset rate hikes and cover the indigent. The critics’ expectations come from the state and federal mandates establishing the Depression-era Blues to make insurance more affordable and accessible.

In exchange, most Blues have nonprofit status and some state tax breaks, but they must pay federal taxes.

…

Though the Blues acknowledge expectations to help, they say they run nonprofit businesses, not charities.

“We don’t have to do a darn thing with that surplus,” said Denise Cesare, BCNEPA’s president and CEO. “It’s not excessive. We can use it to mitigate risk, but we choose to try to invest it into the community to give back over the long run.”

That’s only a small snippet, however, of Axelrod’s extensive examination of the issue of the Blues’ nonprofit status and surpluses.  Read the entire article, linked to above, for the rest.

Another installment for today focuses on how Blue Cross of Northeastern PA will only give 35% of the money it promised towards funding for hospital upgrades and a new medical school.

Writes Axelrod:

The contributions from the insurer’s surplus, totaling $381 million as of October, were meant to strengthen area hospitals and foster alliances to create one big local health system.

BCNEPA’s leaders said the efficiencies created by the collaboration will keep health care costs down and provide better care to the public.

But the donations have stalled as the insurer and some of the hospitals couldn’t reach terms or make the state attorney general comfortable with part of the plan.

Read the article in the Times-Tribune for an explanation of why BCNEPA has not followed through with its funding promises, and what the hospitals and medical school have to say about the issue.

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