Policyholder or claims reserves, built judiciously over time, provide Kansans with security and peace of mind, assuring that the state's largest health insurer is financially strong with the resources necessary to protect members from both the anticipated and unanticipated expenses of medical care. As a mutual insurance company, it is particularly important for Blue Cross and Blue Shield of Kansas to be financially strong during this period of substantial uncertainty and change due to health care reform.
The Patient Protection and Affordable Care Act (PPACA) places additional fees and taxes on health insurers; these will grow over time as the government seeks additional revenue to pay for health care reform. The law also places strict guidelines on insurers regarding their medical loss ratios and how much premiums can be adjusted without triggering additional regulatory review.
In addition, the creation of purchasing exchanges will dramatically change the marketplace and how insurers sell their products. It is important for us to have strong reserves so we can continue to price our products competitively and extend our long tradition of guaranteeing rates for 12 months. We anticipate the exchange will attract a segment of Kansans who have previously been uninsured or underinsured, and who will require a substantial number of health care services. In the absence of a strong individual mandate and with guaranteed issuance of coverage in place, providing coverage to this new population could add significantly to the cost of health insurance premiums for all our members. Having strong reserves will allow us to better manage the financial impact of these changes over time.
The next several years will be both challenging and exciting as the health care delivery system in our country undergoes tremendous change. I am convinced that – through the dedication of our 1,450 employees – Blue Cross and Blue Shield of Kansas will continue to be a company that you can trust to guide you through these changes. Thank you for allowing us to serve you.
Andrew C. Corbin, President/CEO, Blue Cross and Blue Shield of Kansas