Amid criticism for increased rates and cushy executive salaries, the CEO of Blue Shield of California has announced that the company will cap its net income at 2%, returning any extra funds — $180 million this year alone — back to certain policyholders and doctors.
Company CEO Bruce Bodaken, receiver of much derision for his $4.6 million salary, outlined the policy change in a piece published in the San Francisco Chronicle.
“If at the end of any year our net income is more than 2 percent because medical costs were lower or investment income was higher than we had projected, we’ll return that amount to our members and the community,” he writes. “This is a long-term commitment and, we believe, the first of its kind in the country. We are committed to the 2 percent pledge so long as our board of directors determines that Blue Shield remains financially solvent, with sufficient funds to make the investments needed to stay competitive.”
Bodaken breaks down this year’s $180 million surplus: $167 million to individual policyholders; $10 million to physicians and hospitals that invest in new ways to coordinate care through accountable care organizations; and $3 million to the Blue Shield of California Foundation.
For policyholders — only those whose plans are not employer-backed — that money will come in the form of a 30% credit on one month’s bill. That comes out to around $80 per person, $250 for a family of four.
“The commitment we are announcing today is not a cure-all,” writes Bodaken. “But it is a prescription for more access, better health care and greater affordability.”
Blue Shield will cap profits [SF Chronicle]