In fulfillment of its late spring pledge to limit net income to 2% of revenue, Blue Shield of California Chairman and CEO Bruce Bodaken announced today that the not-for-profit company will return approximately $295 million to its customers and to the community by the end of the year.
Blue Shield first made its pledge in June and announced that it would return $180 million in October to offset net income earned above the 2% threshold in 2010. That has been completed. Today’s announcement is based on the company’s estimated 2011 earnings.
California Insurance Commissioner Dave Jones lauded the voluntary action to cap profits, but took the opportunity to reprimand other health insurers in the state for inaction.
“This is good news for Blue Shield policyholders who will save money on their health insurance premiums this year… Unfortunately, other health insurers and HMO’s show no indication that they intend to cap skyrocketing profits or rates, which is why we still need the State Senate to pass AB 52 to give me the authority to reject excessive rate hikes,” Commissioner Jones stated.
Insurers in the state are raking in profits since the fiscal crisis in 2008. The five largest health insurers in this country made a combined profit of $11.7 billion last year, the commissioner noted, citing news reports, and contrasting the profits to struggling families and businesses in the faltering economy.
Commissioner Jones is sponsoring AB 52 which would give the commissioner and the Department of Managed Health Care director the authority to reject what they believe are excessive health insurance premiums.
AB 52 passed the State Assembly earlier this year and is in the Senate Floor where it may be considered in January. It is a huge legislative priority for Commissioner Jones, who recently had all nine bills he sponsored signed by Gov. Jerry Brown. See: http://www.lifehealthpro.com/2011/10/12/california-gets-10-new-consumer-oriented-insurance
Bodaken pledged at a time when activists in many states began using large health insurers’ healthy margins as a reason to oppose changes in efforts to implement the Patient Protection and Affordable Care Act of 2010 (PPACA). See: http://www.lifehealthpro.com/2011/06/08/california-blue-shield-agrees-to-net-income-limit
The PPACA minimum medical loss ratio (MLR) requires carriers to spend 85% of large group revenue and 80% of individual and small group revenue on health care or quality improvement efforts.Another PPACA provision will require regulators to review any efforts to increase health coverage rates more than 10%.
California Blue Shield has been a strong supporter of efforts to expand access to health coverage and to make PPACA work, rather than efforts to block implementation of the legislation.
“We know now that expanding access to coverage is not enough,” Bodaken said during a speech earlier this year in San Francisco.