Vowing to help solve the problem of rising healthcare costs, Blue Shield of California said Tuesday it will limit its income to 2% of revenue and hand back about $180 million to policyholders, physicians, hospitals and the Blue Shield Foundation.
The pledge was made during a teleconference with Blue Shield CEO Bruce Bodaken, and Paul Markovitz, the company's executive vice president and COO.
Bodaken, whose salary was $4.6 million last year, said the company is taking the step to help "solve the seemingly intractable problem of rising healthcare costs."
Calling the cap a "paradigm shift for a health plan" Bodaken added that he hoped other health plans would follow suit.
He said the company began considering this step last summer. When the 2010 margin came in at 3.1% the company board decided to retroactively begin the program in 2010 rather than wait for the 2011 numbers. When company profits exceed 2% of revenue, Bodaken explained, a credit will be distributed each October to customers who are fully insured by Blue Shield in the previous May.