Oct 17, 2008 - 17:42:52 CDT
Associated PressBlue 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, Insurance Commissioner Adam 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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