Health insurance premiums are meant to cover claims, needed services, and to build up a reasonable surplus, Mendelsohn explains. “But we haven’t seen any evidence that these huge surpluses benefit consumers.”

Governmental agencies can review insurance rates and premium hikes in some states, but they have limited authority to restrict stockpiling or to order insurers to spend down those surpluses. In general, regulators can’t tell carriers what to do with the premiums they collect; all they can do is reject proposals to charge excessive amounts.

While carriers say the Affordable Care Act’s provisions expose them to greater risk because they can no longer refuse coverage to people with preexisting conditions or limit coverage to women of childbearing age, the ACA established several programs specifically designed to shield plans from unknown risks. The act also subsidizes premiums for low- and moderate-income earners in order to broaden the risk pool and encourage young healthy people to buy insurance.

The surplus report will be distributed to advocates who review premium rates in their states and often push for more effective rate review processes. Consumer Reports is urging policymakers and regulators, including Health and Human Services officials, to rethink how surpluses are evaluated in the context of rate hike requests and consider establishing maximum ceilings for surplus funds, not just minimum levels, and laws that allow regulatory agencies to deny rate increases or require spending down excess surpluses.

—Roni Caryn Rabin