State Regulators Say Blue Cross Dividend is Excessive

By Kenny Goldberg / Health Reporter, KPBS Public Broadcasting

Published May 29, 2007 at 1:15 PM PDT

This story was published more than 16 years ago.

State regulators are investigating a $950 million payout from Blue Cross of California to its parent company WellPoint. Regulators say the payment could be a violation of an agreement the companies si

State regulators are investigating a $950 million payout from Blue Cross of California to its parent company WellPoint. Regulators say the payment could be a violation of an agreement the companies signed before they merged in 2004. KPBS reporter Kenny Goldberg has more.

Blue Cross and WellPoint agreed not to make policyholders pay excess premiums to finance their merger. But since the deal was approved, Blue Cross has steadily raised premiums -- and now is sending a big dividend to WellPoint.

Become a KPBS sponsor

Blue Cross officials say the surplus is due to higher membership and lower administrative costs.

But Jerry Flanagan, with the Foundation for Taxpayer and Consumer Rights, doesn’t buy it.

Flanagan : The only way that a company like Blue Cross can have $950 million in surplus to send to its parent company, is if it’s overcharging patients’ premiums, co-pays, and deductibles.

State regulators could fine Blue Cross, and order the company to make refunds to policyholders.

Kenny Goldberg, KPBS News.