By regulation in all 50 states, insurance companies must keep a certain amount of surplus funds (instead of distributing profits to stockholders). A recent report analyzing plans covering 1 in 3 Americans showed that in many states, insurers are keeping far more surplus funds than required by law, yet are still raising rates by as much as 18%. In many instances, the insurers could be using the surplus funds to minimize rate increases but are not doing so.
The report, from the Consumers Union (the publisher of Consumer Reports), urges state lawmakers and regulators to change insurance laws to either (1) set a maximum surplus amount or (2) permit regulators to take surplus amounts into account when approving or rejecting proposed rate increases.
At a time when most Americans are struggling to pay medical and other bills, insurers are substantially raising rates even though they already have tons of our money in the bank. Should companies who are supposed to be financing our health care be adding to our stress levels by jacking up our bills?