California insurer to give back $295 million

Blue Shield of California announced Thursday that it is giving back almost $300 million to its customers as part of its pledge to limit net income to 2 percent of revenue.

The company made the promise over the summer as rising healthcare costs force more and more employers to drop coverage and raise the political pressure on health plans. The healthcare reform law requires insurers to justify rate increases of more than 10 percent, and more states are also clamping down.

The company has already returned $180 million to offset net income earned above the 2 percent threshold in 2010.

"We made this pledge to help make coverage affordable for our members," Chairman and CEO Bruce Bodaken said in a statement. "Today's announcement provides more tangible evidence that we're putting affordability before profit. We hope our action will inspire others in the healthcare industry to look for ways to make quality health care more affordable."

According to the company, most of the money will go back to policyholders:

• Blue Shield's individual and fully insured group customers will each get a 54 percent credit against one month of premium;

• Customers with whom Blue Shield shares risk will each get an 18 percent credit against one month of premium; and 

• The company will credit about $283 million back to its individual and group business customers, bringing the two-year total credits to approximately $450 million.

In addition, the company said it would give $10 million for hospitals and physician groups to improve efficiency and $2 million for a future community investment.

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