Insurance Co-Operative Scam

Wanna know why insurance companies are seeming amicable to so-called non-profit health care co-operatives?

In a  recent New York Times article by Robert Pear and Gardiner Harris about the new idea of Health Care Co-Operatives, I noticed that BlueCross BlueShield of North Dakota was a nonprofit organization.

Mr. Conrad’s own state demonstrates the uncertainties surrounding cooperatives. Blue Cross Blue Shield of North Dakota dominates the state’s private insurance market, collecting nearly 90 percent of premiums. As a nonprofit owned by its members, the company would hope to qualify as a co-op under federal legislation, said Paul von Ebers, its incoming president and chief executive.

Further, Mr. von Ebers,  had this to say about their compensation policies:

“If we wiped out the top 10 salaries in the company, it would make almost no impact on health insurance premiums,” said Mr. von Ebers, who will be paid $500,000 a year, with incentives that could raise that to $750,000.

Clearly, this man wants to get into the co-op business.  This got me thinking about why the insurance lobby has be open to the idea of health care co-operatives.  What if all the big players in the insurance industry are nonprofits already?  Would they have legislation tailored so they could qualify to operate their existing companies as a co-op?

Bingo!  In a report prepared by Alliance for Advancing Nonprofit Healthcare, I found that most of the big players are nonprofits.

Some interesting facts outlined in this industry report cite:

  • Of the 138 health plans in the United States with at least 100,000 medical enrollees, 84 or 61% are nonprofit.
  • Of the 203,203,306 total medical enrollees of these 138 health plans, 97,931,924 or 48% are in nonprofit health plans.

With the majority of the largest insurers already classified as nonprofit organizations with tax exempt status, it appears many Americans still have strong doubts about the honesty of the existing health insurance industry in this country.  This feelings may be justified when you examine the key revenue indicator for insurance companies.  This is the “premium to surplus ratio”.  This is a ratio commonly used by the property and casualty insurance industry as a measure of financial strength or to indicate to what degree a particular insurance company is leveraged.

One company in the report above had a surplus of $41,000,000.

I got tired looking up data so I am prematurely ending this post.  *yawn*