Blue Cross Plans Jump to An Early Lead: Coincidence or not?

An article in the October 11, 2013 New York Times titled Blue Cross Plans Jump to an Early Lead caught my attention. It reports that Blue Cross Blue Shield carriers are emerging as the most competitive of the new Affordable Care Act (ACA, or Obamacare) plans. It states that the majority of Blue Cross Blue Shield companies are “not-for-profit” corporations. This unique status can be very important when it comes to creating affordable insurance policies.

Here is a reputable link that describes what a Not-For-Profit corporation is. Here’s a quote from that link, ” A not-for-profit corporation may not be formed for pecuniary profit or financial gain and the corporation’s assets, income or profit may not be distributed to or otherwise used to benefit the corporation’s members, directors or officers except as permitted by the Not-for-Profit Corporation Law, e.g., as reasonable compensation for services to the corporation.”

I am growing to love not-for-profit insurance companies. When we look at accurate cross-comparisons of long-term care insurance (LTCi) policies here in TX, we discover that MedAmerica Insurance Company and LifeSecure Insurance Company often have the most competitive LTCi rates. Neither company is not-for-profit, but each is a wholly owned subsidiary of a not-for-profit Blue Cross Blue Shield parent company.

Not-for-profit status requires insurance companies to spend more money paying claims and less money on administrative costs, like salaries and other expenses. I asked my LifeSecure Regional Representative to read this blog and check it for accuracy. She confirmed that the tight budgeting and fiscally responsible management of the not-for-profit-parent is an integral part of LifeSecure’s management and culture.

I used to wonder why these two carriers had such competitive rates and whether they were charging policy holders enough to ensure stable enough premiums in the long haul. Now I better understand a big part of why their LTCi plans are safe and very competitive.