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If a nonprofit makes a profit, then is it still a nonprofit?
Nonprofits exist to provide service. We don't sell stock, and we don't have to maximize profit to pay shareholders. But we do have to make just enough to deliver services, run the business and keep a rainy day fund in case of unexpected member demand. Some years see a profit, some years do not.
Over the past decade, Regence's underwriting gain (profit) averages less than one penny per premium dollar after paying claims and costs. That demonstrates we consistently operate according to our nonprofit philosophy.
Our mission is not to make a profit. We make a profit so we can fulfill our mission.
Regence is incorporated as a tax-paying 501(m) nonprofit, a special category designated by Congress in 1987 to target the Blue Cross and Blue Shield plans. It's a bit confusing: We aren't a charity but we aren't a for-profit. We don't pay dividends, but we do pay taxes: In 2010, Regence paid $131.1 million in local, state and federal taxes and assessments.
The majority of health coverage in the U.S. is nonprofit: 46 percent of our national health care dollars go through Medicare, Medicaid and other public programs. And 61 percent of private health plans are nonprofit.
When you hear people say that rising premiums mean rising profits, keep in this mind: health insurers file detailed explanations to state regulators about what's behind rising premiums:
With the U.S. spending nearly $3 trillion on health care this year, there certainly are profits in this business sector, as shown in Yahoo.com's list of most profitable business sectors.
It's important to understand that while we negotiate the best prices we can for members, our health insurance premiums reflect the profits of all the businesses on this list, even though Regence itself is committed to being nonprofit.
This is why Regence is determined to educate members and providers and to collaborate throughout the health care system to bring down the cost of care for everyone.