To great fanfare, Blue Shield of California earlier this week announced a voluntary “cap on profit,” and a rebate of $167 million to policyholders.
After many recent rate increases, Blue Shield of California’s announcement is welcome for those consumers getting rebates. But beyond the Blue Shield press release, there was a lot of questions that came to our mind: How would these figures on revenues, costs, reserves, and other factors are being calculated? How would this commitment be enforced?
It’s important that the oversight of the new federal law has ushered in new accountability on insurers, but we need additional state authority and action to make the promise real. That’s why we need to pass the pending rate regulation bill, AB52(Feuer), to ensure that California consumers don’t get overcharged on the front end, by Blue Shield or any other insurer.
Wendell Potter and others believe that the recent Assembly passage of AB52(Feuer) factored into Blue Shield’s decision. After all, insurers in states with rate regulation have had their profit restricted to less than 2% of net income, especially during this recussion. But more than that, we want to ensure that people don’t get overcharged on the front end–when they make decisions about whether to get coverage or not. So Blue Shield lobbied against AB52, as did other insurers and industry. We’ll see if other insurers follow suit–whatever their motive is.
We will have more as we find out more information.