Bismarck Tribune - North Dakota News - N.D. insurer reports S&P downgrade

N.D. insurer reports S&P downgrade

Oct 18, 2008 - 09:02:10 CDT

By JAMES MacPHERSON/Associated Press Writer

Blue Cross Blue Shield of North Dakota says one of its key financial ratings has been lowered after the state Insurance Department rejected its request to raise rates. Insurance Commissioner Adam Hamm says the company is financially healthy.

Blues Chief Executive Officer Mike Unhjem said Friday that Standard & Poor's is giving the company an "A-" rating. Earlier, it had an "A" rating. The agency said Blue Cross's outlook has gone from stable to negative.

The Blues' surplus at the end of June was about $220 million, Hamm said.

"They are financially healthy, and their surplus is healthy," the insurance commissioner said.

Blue Cross Blue Shield of North Dakota is not alone in having lowered financial ratings, Hamm said.

"Insurance companies around the country are being downgraded because of all the financial turmoil in America," he said.

Unhjem said that if the Blues' current rates won't cover payments for medical claims, the company will have to dip into its reserves.

"Contrary to what many people believe, the reason we ask for any rate increase is to ensure we can pay the claims submitted by our members, reimbursing health care providers for health services," Unhjem said in a statement. "Essentially, these rate denials mean we will experience underwriting losses that, if continued, could ultimately threaten our members and our providers."

Hamm recently rejected requests for a 14.9 percent rate increase for group policies and a similar request for a group that provides medical coverage for individuals.

He said one factor in his decision was that Blue Cross Blue Shield indicated for the first time that it would cut medical payments to its providers, saying its contracts allowed that. He said the insurer can refile its rate request after it changes its contract language.

"I realize the management of Blue Cross Blue Shield would like to blame me and the Insurance Department for the rate increase denials, but the reality is the denial came about because of their action," Hamm said. "The ball is back in their court."

The Blues statement said the company plans to hold "an open media forum" next Thursday to further discuss its financial status.

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Comments

xx wrote on Oct 18, 2008 5:05 PM:

" Yea I wonder what the CEO's pay is for this Company "

Galaxy Ranger wrote on Oct 18, 2008 4:50 PM:

" To Thanks Hamm, the 5% includes people changing coverage to a higher deductible and copay in order to lower premiums and save money. Also costs vary by region, and Medicare still doesn't even cover the costs of services in North Dakota (ND Doctors are paid less than doctors in most other states) so private insurance has to make up the difference.

That $200 million is not a surplus, it is a Reserve, just like the savings you have just in case you loose your job. Insurance companies have Reserves so they can pay claims if they can't get premiums for some reason or their is a major disaster, like a massive economic slow down with lots of businesses closing, or a major flu outbreak, like the fears of a bird flu epidemic a couple years ago.
Poolman and Hamm have caused Blue Cross's reserves to go down to about 3 months of claims payments, half of what they had just a few year ago. I don't think that is a good idea in the uncertain times we are in. Do you have enough savings for 3 months if you loose your job or do you have more than that? "

Getting Old wrote on Oct 18, 2008 12:14 PM:

" Politics politics politics. I for one will be very happy once this election is over. "

Thanks Hamm wrote on Oct 18, 2008 11:19 AM:

" Thanks Mr Hamm. Premiums are too high. I recently heard on a radio program that the national increase for insurance premiums is 5%. Why do we have more than a 14% increase? They have a $200 million surplus! The average family cant afford BCBS. Its also killing local goverments who are trying to pay these premiums for employees. "

la wrote on Oct 18, 2008 7:58 AM:

" Way to go Mr. Hamm we need that can of leadership not somebody who makes his living representing injury workers by trying to get on the same board who pays out the claim. Is that call "conflict of interest" or maybe that law firm in Fargo has other plans. Interesting again! "

NDer wrote on Oct 18, 2008 6:25 AM:

" Hamm is playing politics with this issue. He is risking the financial security of one of our only insurance companies. I GUARANTEE you that if he is re-elected he will grant BCBS's first post-election rate increase request just like he granted BCBS's 9.9% increase request less than a week after he was appointed to the job last year. Hamm's concern about winning an election should not be the determining factor in such an important decision-making process. Hamm should be ashamed. "

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