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Behind BSCA's 2% Solution

Margaret Dick Tocknell, for HealthLeaders Media, June 15, 2011

Call me an optimist, but I like to think that Blue Shield of California was simply doing the right thing when it announced last week its intentions to limit its income to 2% of revenue and to hand back about $180 million to policyholders, physicians, hospitals and the Blue Shield Foundation.

Blue Shield isn't exactly a media darling, but even California news outlets seemed content to spread the upbeat news that a major insurer was capping its income and—get this—was taking this bold step voluntarily. Throw in the refund to policyholders and Blue Shield garners some high fives.

Usually when an insurer makes this type of gesture there's a regulator standing behind the curtain pushing the health plan spokesperson into the media spotlight.

That was pretty much the case in September 2010 when Blue Cross Blue Shield of North Carolina announced that it would make $156 million in refunds to its individual policyholders. In that case state regulators discovered that the Blues plan was collecting reserves to pay for future claims that could extend beyond 2014.

In Colorado, Anthem Blue Cross and Blue Shield agreed in September 2010 to provide a premium credit totaling $20 million to about 90,000 individuals. The refund was linked to a Colorado Department of Insurance review of consumer complaints following rate increases by the insurer.

But in the case of Blue Shield of California, no one had to push company CEO Bob Bodaken out into the public eye. He embraced it. There was a press conference where two-heavy hitters, Bodaken and Paul Markovich, Blue Shield's COO, fielded a wide range of questions. And then there was Bodaken's speech at the Commonwealth Club in San Francisco.

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