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Blue Shield of CA Announces $180M Refund, Cap on Income

Margaret Dick Tocknell, for HealthLeaders Media, June 8, 2011

The announcement comes on the heels of the passage by the California Assembly of AB52, which would give state regulators the power to reject or modify excessive health insurance premium increases. The bill now moves to the state Senate.

Blue Shield COO Markovich conceded that the credits were not as large as some of the rate increases recently requested by Blue Shield but said the move demonstrates the insurer's commitment to "do all we can to make healthcare affordable."

In March Blue Shield withdrew a request that would have boosted premium rates by as much as 17% for some of its members.

Markovich stated that in the past the insurer has posted margins in the 2% to 5% range. He said the company will remain committed to the 2% cap as long Blue Shield can remain financially solvent and make the investments necessary to stay competitive.

Bodaken, responding to questions, said the credit was not related to the Affordable Care Act's medical loss ratio requirement that health plans spend at least 80% of premium revenue on reimbursements for clinical services and activities that improve health care quality. Health plans that don't meet that requirement may have to provide rebates to their customers "We have no idea if we will need to pay a rebate next year or not. This credit reflects our longstanding opinion that healthcare is a right."

Blue Shield posted net income of $315 million in 2010 on revenues of $10 billion.


Margaret Dick Tocknell is a reporter/editor with HealthLeaders Media.
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