LOS ANGELES (CBS) — One of California’s biggest health insurers said Tuesday it will cap its earnings at 2 percent of revenue and return amounts over that level to its customers, care providers and the community.
Blue Shield of California said the new plan starts with last year’s profit. That means it will return $167 million to policyholders.
Chairman and CEO Bruce Bodaken said in a San Francisco Chronicle editorial his company was announcing a “new commitment to help our customers get the health care they need at a price they can better afford.”
“We don’t have absolute power to control rising health care costs, but there are some things we can do to help people pay for it,” he wrote.
Bodaken said San Francisco-based Blue Shield will remain committed to the cap as long as its board determines it can remain financially solvent and make investments to stay competitive.
Blue Shield serves commercial, individual and government markets and covers more than 3 million people.
The CEO also said customers who foot the entire premium bill for their coverage with no help from employers will receive a 30 percent credit on one month’s bill.
The company faced scrutiny from state regulators earlier this year for proposed double-digit rate hikes for individual health insurance policyholders. It eventually withdrew a planned May 1 rate increase that would have boosted rates as high as 18 percent for some policyholders.
Health insurers, especially those serving California residents, have taken extensive criticism in recent years for imposing big premium hikes on people who buy individual insurance. Blue Shield competitor Anthem Blue Cross, California’s largest insurer, attracted national attention early last year for plans to raise rates as much as 39 percent for some customers.
Anthem Blue Cross is a subsidiary of WellPoint Inc., the largest health insurer based on enrollment. Criticism of those planned hikes, which the Indianapolis insurer later dropped, helped reignite a stalled health care overhaul debate in Congress.
Insurers have said their rates are rising in part because health care costs are climbing, and Bodaken said in the editorial Blue Shield had to raise premiums last year due to the rising costs of hospitals, physicians and prescription drugs.
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