Support for LAist comes from
We Explain L.A.
Stay Connected

Share This


Health Insurance Company Returns $283 Million to Nearly 2 Million Customers

State Investigates Health Insurance Companies, Giving Back to the Little Guy
Stories like these are only possible with your help!
You have the power to keep local news strong for the coming months. Your financial support today keeps our reporters ready to meet the needs of our city. Thank you for investing in your community.

A health insurance company announced this week that it was deciding to give back — to its policyholders.

Blue Shield of California said that it was giving back $283 million to nearly 2 million policyholders in California, according to the Los Angeles Times. The company explained that it had not spent as much on health care as it had expected, and because the company made a pledge earlier this year to take in a maximum of 2 percent. Earlier, the company stirred up controversy when it hiked up premiums as much as 59 percent.

Rebates like this could become more common thanks to federal health care reform. Insurance companies are expected to spend at least 80 or 85 cents of every dollar they take in on actual medical care (there is quibbling over what counts, but things like executive salaries, administration and advertising are definitely out). Insurance companies are supposed to return any excess money paid on policies back to policyholders.

Giving back rebates in such a public way like Blue Shield is probably a great PR move. "If an insurer has to give a rebate, it certainly seems like a good public relations move to do it proactively than to be forced to do it," Larry Levitt, who heads the nonprofit Kaiser Family Foundation's Initiative on Health Reform and Private Insurance, told the Los Angeles Times.

Support for LAist comes from

But insurance commissioner Dave Jones doesn't expect other companies to explicitly cap their profits without a fight (and since Blue Shield is a non-profit, it's not quite like most of the other major insurers). "Unfortunately, other health insurers and HMOs show no indication that they intend to cap skyrocketing profits or rates," he said, in a statement.