Last year, California health insurer Blue Cross Blue Shield announced that it would be returning more than $160 million in surplus profits to its 2 million policyholders. Amidst accusations of profiteering, the company has announced another wave of refunds that will total $283 million, which will begin being sent out in December of this year. Most of the rebates will come in the form of credit on insurance bills. The company notes that December’s refund will likely cut policyholder’s bills by at least half.
Individual policyholders can expect to see average savings of $135 on December’s bill, while families of four will see $400 to $700. The company’s CEO, Bruce Bodaken, says that the refunds are meant to help consumers cope with rising health care costs. These same health care costs are blamed by the insurer for driving up premiums throughout the state. The company’s refund is part of a plan announced early last year that would have Blue Cross Blue Shield return money when the company’s net income exceeded 2% of its revenue.
The company is also getting a head start on new federal insurance regulations that require insurers to spend no less than 80% of the money they collect in premiums on improving medical care. Falling below the 80% threshold would mean that insurers will have to return that money to consumers or face heavy fines. This provision of the Affordable Care Act is not scheduled to take effect until 2014, but Blue Cross Blue Shield says that consumers need the money sooner rather than later.
