Health insurance provider Blue Shield of California will return $295 million in profits to its customers, fulfilling a pledge it made in June to cap all its profits at 2 percent of revenue.
Policyholders will receive the money mostly in credits on future insurance bills. Blue Shield executives say the move is an effort to curb rising health care costs in the face of increasing insurance company profits.
“Today’s announcement provides more tangible evidence that we’re putting affordability before profit,” Bruce Bodaken, chief executive officer of Blue Shield, told the Los Angeles Times. “We hope our action will inspire others in the healthcare industry to look for ways to make quality healthcare more affordable.”
The company had originally planned to return $180 million this month based on profits from 2010, but new estimates on 2011 revenue raised the amount returned to customers.
President Barack Obama’s administration voiced its support for Blue Shield’s pledge.
“This announcement will provide some much needed relief to families who have seen their premiums increase in recent years,” said Nancy-Ann DeParle, deputy chief of staff for policy.
On average, a family of four will see a reduction of about $420 in December’s premium, but the refund could mean as much as $700 for some.
Blue Shield’s revenue refund comes before a provision of the Affordable Care Act kicks in next year, which would require that all health insurance companies spend at least 80 percent of customers’ premiums on health care – and not administrative costs or profit. Any money not spent on health care that falls under the required amount must be returned to policyholders.