July 14, 2024

Prescriptions: Blue Shield of California Vows to Cap Profits

Blue Shield of California, a not-for-profit health insurer based in San Francisco, is promising to limit its profits and give the bulk of any excess income it makes back to policyholders who are buying coverage.

The insurer’s chief executive, Bruce Bodaken, made the announcement on Tuesday in an opinion piece in the San Francisco Chronicle.

The insurer has recently come under sharp criticism for steep hikes in the amount it charges for its policies as well as how much it pays Mr. Bodaken.

Blue Shield was an early proponent of an overhaul of the health insurance industry, and the insurer said it knew its decision was not an answer to the problem of how to cover people when the cost of coverage was so high.

In the opinion piece, Mr. Bodaken says the insurer plans to cap its profits at 2 percent of its revenues. If in any given year it makes more money because the cost of providing health care was lower than it expected or because it made more money from its investments, Blue Shield says it will give the excess back to the community.

Blue Shield is starting with the $180 million of excess profits it made last year — $167 million will go to policyholders, $10 million to hospitals and doctors that try new ways of delivering better coordinated care and $3 million to its own foundation.

Will other not-for-profit insurers follow suit?

Article source: http://feeds.nytimes.com/click.phdo?i=2585a4cd968b773f89c2ac68bfd59eb2

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