Health reform law prompts Blue Shield of CA to cap profits, issue refunds to customers

Did The Health Reform Law Pressure Blue Shield Of California To Cap Its Profits?
By Igor Volsky on Jun 8, 2011 at 9:05 am

Maggie Mahar makes the case for how the Affordable Care Act — particularly the provision requiring insurers to spend a certain percentage of premium dollars on health care costs — prompted Blue Shield of California to voluntarily cap its net earnings at 2 percent of revenue and issue $180 million in rebates to beneficiaries and providers:

Did “soul-searching” lead to this decision? Perhaps. But I would suggest that Blue Shield is responding, in an enlightened and pragmatic way to a climate change within the healthcare industry.

Government regulators are beginning to take a hard look at insurance premiums. Blue Shield California “had recently come under fire by state regulators for rate hikes,” ModernHealthcare.com explains. “In March, the company abandoned plans to raise rates on individual policyholders for the rest of the year, under pressure from the California Department of Insurance.”

Blue Shield is trying to inoculate itself against further criticism (and regulation) by getting ahead of the regulators. $180 million is hardly a huge sum. But pledging to put a 2 percent cap on net income is a serious step forward. This should help curb premium inflation– assuming that the company doesn’t fudge the way it calculates “net income.” Though now that Blue Shield has made a public commitment, I would guess that state regulators will keep an eye on that number.

Consumer advocates are undoubtedly hoping that Blue Shield’s move will pressure other nonprofit health care plans to begin issuing their own rebates, particularly as consumers are now using less care and insurer reserves are only increasing.

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http://thinkprogress.org/health/2011/06/08/239222/did-the-health-reform-law-pressure-blue-shield-of-california-to-cap-its-profits/

The cap becomes effective for coverage purchased in 2011. Rebates to insureds will be paid in 2012 in order to bring loss ratios in 2011 up to the minimums (which is to say, to bring premiums down to the effective maximums).

However, there have been some waivers granted that allow lower loss ratios (higher premiums) temporarily, and then phase in to the new limits. Insurers are threatening to pull out entirely from areas they currently cover unless they are given relief. They're not going to submit to these limits on their profits without screaming and kicking.

BCBS entities are NOT non-profit. Because of legal actions several BCBS affiliates had to admit to being a 'for profit' corporation.

Department of Justice is investigating Blue Cross Blue Shield

The probe is examining whether Blue Cross Blue Shield plans may have suppressed competition in violation of antitrust laws, resulting in rising health care costs.

BCBS just bought out the CIGNA Medicare contract. BCBS owns Palmetto, Trailblazer and now CGS,(CIGNA Medicare). This will basically forbid them from competing against each other for federal contracts. This is a monopoly. CIGNA is out of the Medicare business.
(That is a least a good thing. CIGNA has been responsible for the deaths of people because they denied coverage on their private insurance.)This information is freely available to anyone caring to 'Google' it.

Blue Cross Blue Shield of North Carolina, the state's largest insurer, earned $186 million last year while raising premiums on customers as the economy slid into recession.

For folks getting ready to take Medicare this is very disturbing.

http://www.therepublic.com/view/story/31f9e6e180724f7f8... /
http://schealthcarevoices.org/2011/03/30/justice-depart... /
http://www.tennessean.com/article/20110329/BUSINESS05/1...