Blue Shield To Credit $50 Million

As it continues to operate more in line with the expectations of a not-for-profit company, Blue Shield of California will credit back millions of dollars to its policyholders by the end of the year, although the total is far smaller than what it has given back in the prior two years.

The San Francisco-based Blue Shield will credit back about $50 million to its 3.3 million enrollees next month. The credit will be in the form of a one-time reduction in monthly premiums.

Altogether, Blue Shield will have credited $470 million back to its enrollees since 2010.

“As a not-for-profit, we are committed to expanding access to high-quality health care at an affordable price. This pledge continues to demonstrate that we put affordability before profit,” said Chief Executive Officer Bruce Bodaken.

Bodaken announced Blue Shield’s intention to keep its annual income to 2% of revenues in 2010. The decision was made after the insurer came under scrutiny from media and consumer groups for attempting to levy premium increases of 80% or more on some of its enrollees, as well as impose multiple increases on some policyholders within a calendar year.

Since 2010, Blue Shield has come closer to its 2% net income goal, which is why it is reducing the credit this year, according to spokesman Steve Shivinsky.
Moreover, Shivinsky said the insurer has also tried to hold the line on premium increases moving forward.

“We tried to adjust the (rate increases) so they were close to the 2% margin, we would hit the margin and not have to get so much back to customers,” he said. Shivinsky added that ideally, Blue Shield will eventually offer no more credits.

Enrollees in the same plan between Aug. 1 and Dec. 31 of this year are eligible for the credits. Among group health plans, the average mid to large group employer will receive a credit of $35 to $40 per employee. Among groups with 50 or fewer employees, the credit will average $40, and will range up to $105 for enrollees with dependents.

Among individual enrollees, the credit will average $25 and top out at $50. For a family of four, the credit will average $75 and will range between $40 and $125.

Despite the credits, Blue Shield has still been criticized for maintaining a surplus of more than $3 billion, particularly from the Santa Monica-based advocacy group Consumer Watchdog. That organization has unsuccesfully tried to qualify an initiative on the ballot to curb premium increases from health insurers.