Blue Shield of California to return money to customers
Health insurer Blue Shield of California, which last summer said it would return $167 million in excess profit to nearly 2 million policyholders, now says it will give them an additional $283 million in December.
Policyholders are seeing the first round of money this month through credits on their insurance bills. The next giveback, to be announced by the insurer Thursday, will cut most of the bills in December by more than half.
Individual policyholders will see their December premiums reduced by an average $135. A family of four will get a $420 average cut, but the reductions could be as much as $700.
Chief Executive Bruce Bodaken said the San Francisco nonprofit is trying to help policyholders cope with rising healthcare costs by making good on a pledge to return money when its net income exceeds 2% of its revenue.
“Today’s announcement provides more tangible evidence that we’re putting affordability before profit,” Bodaken said in a statement. “We hope our action will inspire others in the healthcare industry to look for ways to make quality healthcare more affordable.”
Blue Shield’s action comes as insurance companies face the prospect next year of returning millions of dollars collected from policyholders but never spent on healthcare.
Under new federal regulations, insurers must spend at least 80% of consumers' premiums on medical care and not reserve that income for administrative costs or profit. But with consumers going to doctors less and often skipping treatment during tough times, insurers may not meet the 80% requirement and be obligated to issue refunds.
Some healthcare experts, while not singling out Blue Shield, said they are skeptical of insurers issuing refunds before they are required to do so.
“It certainly seems like a good public relations move to do it proactively than to be forced to do it,” said Larry Levitt of the nonprofit Kaiser Family Foundation’s Initiative on Health Reform and Private Insurance.
Blue Shield said that the money being returned this month comes from excess 2010 profit, while the money announced for December is from extra 2011 earnings.
Employers also will get a break on their December bills under the Blue Shield plan. Firms with two to 50 employees will get an average credit of $220 per worker. Larger companies will receive an average of $195 per employee. Companies that pay part of their workers’ premiums will decide how much to share with them.
Aside from the break on insurance costs, Blue Shield said it also is devoting $12 million for hospitals and physician groups to build stronger collaborations and for other healthcare-related reforms. That is on top of $13 million it announced in June for such efforts.
-- Duke Helfand
Photo: New $10 notes shown in an uncut sheet. Credit: Alex Wong / Getty Images