Opinion: Blue Cross has a big pile of cash

The dispute between the University of Mississippi Medical Center and Blue Cross of Mississippi has had some interesting side effects. One is the revelation that the state's largest private health care insurer has amassed a huge surplus of money while raising rates in recent years.

The Mississippi Today website reported last week that Blue Cross "has accumulated far more than what regulators require to protect consumers, and perhaps the largest such surplus by percentage of any Blue Cross company in the country."

To put a number to it, Mississippi Today said the company held a surplus of $750 million at the end of 2021. That is about eight times the amount of backup cash that regulators require, and four times what Blue Cross requires from state insurers that use its name.

Several consumer advocates observed that the large surplus may indicate customers are paying too much for their health insurance. But an official with Blue Cross Mississippi spun it the other way, saying the large reserve is critical to the company's financial security and its ability to pay for future health care services.

The immediate point might be to ask why, with all this extra cash in reserve, Blue Cross and UMMC can't figure out a equitable way for the state's largest private health insurer and its largest medical care provider to share the huge amount of money involved and ensure proper treatment of their mutual customers.

Late last month, with a nudge from state Insurance Commissioner Mike Chaney, the two organizations agreed to arbitration to settle the dispute. This worked in 2018 and hopefully it will solve the problem this time, too.

But a big-picture question is why an insurer in a relatively small-population state — which has a large percentage of residents on government insurance and a sizable amount of people without any health insurance at all — would build up such a big surplus in the first place.

Measured by the percentage of money regulators require insurers to hold in reserve, Blue Cross Mississippi's cash is significantly larger than that of the second-largest medical insurer in the state, United Healthcare. Its reserve percentage also is much higher than Blue Cross peers in Louisiana, Arkansas and Georgia. And a 2019 Vermont report that looked at 16 Blue Cross companies found that Mississippi's had the highest percentage of reserves.

Health insurers are right to believe that the cost of medical care will keep rising. Given the trends of the past 50 years, the only logical prediction for the direction of prices is upward.

But all health insurers are aware of this and set their prices accordingly. It's just puzzling that Blue Cross Mississippi is the company that has such an above-average surplus.

You can't fault a for-profit company when it makes money. And Blue Cross Mississippi's reserves don't violate any laws. But in the world of public relations, it reflects poorly on Blue Cross when it's got millions stashed away while hospitals like UMMC are struggling financially.

— Jack Ryan, McComb Enterprise-Journal