Blue Shield of California announced that it intends to return $167 million to its individual policyholders, and it plans to return money each year going forward. More specifically Blue Shield will give a 30% credit on one monthly bill this year – a move that is expected to save an individual on average $80 and a family of four $250. The insurance giant also announced that it will continue to return money to its policyholders every year that its profits exceed 2 percent – the first insurance company in the nation to make such a pledge. The new policy does not apply to employer-based health insurance plans.
Blue Shield didn’t stop there, though. The company also announced that it will give another $10 million to doctors and hospitals that coordinate care through Accountable Care Organizations, as well as an additional $3 million to the Blue Shield of California Foundation to support safety net programs.
Blue Shield has taken a beating from the public and from lawmakers for announcing its plan to raise premiums on individual policy holders by 59% earlier this year. Adding fuel to the fire was the release last week that Blue Shield CEO, Bruce Bodaken makes $4.6 million annually.
What Blue Shield’s motives are is anyone’s guess. But, with the California legislature looking to clamp down even more on health insurance companies, Blue Shield may just see the writing on the wall. AB 52 just passed out of the California Assembly and is on its way to the Senate. The bill would allow the state to outright reject any rate hikes proposed by health insurance companies that they consider too excessive. Today, the state has the authority to review increases but does not have the power to stop them for taking effect.
Moreover, the company wants to be well-positioned as health care reform is fully implemented in 2014. In 2014, each state will have established an “insurance exchange” that allows health insurance companies access to millions of new customers, including 8.4 million uninsured Californians.
In any case, it looks like the California consumer may just get a win.