Insurers have to maintain a safety net of money to protect themselves from unforeseen market conditions, but a new study from Consumers Union says that some Blue Cross Blue Shield insurers took it too far, preferring to focus exclusively on stockpiling cash at the expense of customers. Two of the worst cases have stockpiles 5 to 7 times higher than state solvency requirements, yet continue to hike premiums each year instead of using the, uh, surplus surplus to offset customer costs.
The showdown over skyrocketing insurance rates in California got even nastier yesterday. The state’s Attorney General’s office announced that it has subpoenaed financial documents and launched an investigation into allegations of illegal premium hikes and wrongfully denied claims by seven separate health insurance providers.
The LA Times says that the State of California is seeking a $12.6 million dollar fine against Blue Shield for 1,262 violations of claims-handling laws that resulted in 200 people losing their insurance. Blue Cross and Blue Shield have already been fined $1 million for improperly terminating the policies of the sick and pregnant.
Blue Shield lies to popular political blogger, his wife, and anesthesiologist, to avoid paying fully for an epidural. [Daily Kos]