Blue Shield of California's pledge to cap its profit margin will result in a credit to members of 10% to 30% of one month's premium, the San Francisco-based insurer announced.
Blue Shield of Calif. members can expect premium credits next month
Blue Shield will use May 2011 dues and premium as basis for the refund, according to a news release from the not-for-profit insurer. Credits for the average individual customer will be about $80, ranging from $25 to $160, while a family of four would see about $250, ranging from $140 to $415. Eligible members and group customers will receive letters starting this week notifying them of the refunds that would be reflected on their October statements.
The company faced media criticism and the threat of governmental review when news of Chairman and CEO Bruce Bodaken’s $4.6 million 2010 salary went public. Blue Shield of California in June announced its intention of capping net income at 2% of revenue, thus refunding about $180 million to members, providers and an unaffiliated not-for-profit foundation.
Blue Shield said its motivation for the refunds came from returning the focus on costs from healthcare delivered by hospitals, doctors and other professionals, rather than concentrating on the rising cost of healthcare buoyed by insurer profits and administrative costs.
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