The recession was short-lived for Utah's health insurance companies.

Despite halting economic recovery, all but one of the state's five largest insurers posted robust profits last year.

Some paid fewer medical claims than they expected due to cost-conscious patients delaying or forgoing medical care. Others captured new customers. All benefitted from a rebounding stock market and higher returns on investments.

Yet the companies — including the nonprofits SelectHealth and Regence BlueCross BlueShield, Utah's two largest insurers — continue to hike premiums while sitting on large reserves.

They defend double-digit increases in rates that they charge as a means to prepare for the unknowns of federal health reform and the likelihood that people will spend more on health care when family finances stabilize.

"It's important to have modest operating margins so that we can meet our obligation to pay claims and reinvest in the community to help our members," said Mark Brown, a vice president and CFO of SelectHealth, the insurance arm of Intermountain Healthcare.

But industry watchdogs say insurers are socking away far more than regulations require, begging the question: when will consumers catch a break?

BlueCross BlueShield of Utah netted $16.2 million last year, a sharp reversal from 2009, when the company reported a $25 million loss.

And it built up reserves by 13 percent for a total of $244 million. That's more than the company had socked away before the recession in 2006, and nearly eight times the amount required by the state Department of Insurance.

SelectHealth is resting on $279.7 million, seven times more than required, and posted a second year of profits.

"This is classic nonprofit behavior," said Avram Goldstein, communications and research director the pro-reform group Health Care for America Now. "They're hoarding cash at same time that they're inflicting massive premium hikes on customers."

Brown called SelectHealth's reserve levels "safe and appropriate," and said,"we have not made an effort to accumulate additional reserves."

Jake Garn, chief examiner at the state insurance department, agrees: "By and large, health insurers don't have excessive surpluses."

He cautions against using reserve requirements as a gauge to determine whether nonprofits are feathering their nests, noting they are just a bare minimum meant to alert regulators to financial weaknesses that put policyholders at risk.

At a time when Americans are losing patience with soaring health care costs, it's easy to blame insurers, said Garn. "But in Utah the profit percentage for health insurers is at about 1 percent. That's lower than grocery stores, oil companies, pharmaceutical companies and hospitals."

Utahns have long enjoyed some of the lowest insurance rates in the nation, but they're rising with no relief in sight.

An isolated few extended discounts to policyholders this year, but most pushed for increases, some as high as 20 percent, said state Health Insurance Director Tanji Northrup.

Jennifer Cannaday, BlueCross BlueShield's vice president of market strategies for Utah, said premiums are based on what her company expects to pay in medical claims.

"It's that simple," she said, adding that being a nonprofit means "not having to build profits for shareholders."

Indeed, the nation's largest for-profit insurers with a presence in Utah, United Healthcare and Humana, are heading into a third year of record profits generated by charging more in premiums than they spend on patient care. The insurance giants have hefty capital reserves and are rewarding shareholders with new dividends.

State level data on these companies are misleading because they have such a small share of the Utah market.

But non-profits' bottom lines are drawing equal scrutiny as premiums increase at twice the rate of medical inflation.

The "Blues," all BlueCross plans nationwide, had a higher profit margin last year than in 2007, 2008 and 2009 combined, according to an April 2011 report by Wall Street analyst Carl McDonald.

"If the Blues maintain their current capital levels, it will likely lead to more battles with regulators and consumer activists," wrote McDonald.

Indeed, public outrage over proposed premium increases drove Blue Shield of California to pledge to cap earnings it keeps at 2 percent. And regulators in North Carolina found nearly $156 million in refunds owed to Blue Cross policyholders because of changes coming under federal reform.

Northrup said those changes will have little effect on most Utah insurers, which already meet new federal requirements for the percentage of premiums they must spend on actual medical care.

Still, most held on to more of their premium dollars last year, a reflection they say of penny-pinching consumers spending less time at the doctor's office.

One outlier was SelectHealth, which could signal surging demand for health care.

The company netted only $33.7 million, down from $52.8 million in 2009, even as it earned more on investments and took on new customers: enrollees in Utah's Children's Health Insurance Program and a federal high risk pool for uninsurable people with pre-existing conditions.

Lower short-term profits, though, could pay off in consumer goodwill — BlueCross BlueShield saw a decline in its customer base last year.

kstewart@sltrib.com