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Blue Shield of California to give $180 million back to health insurance customers, doctors and hospitals
By Insure.com staff

Blue Shield of California announced it will give back $180 million to policyholders, physician groups, hospitals and nonprofits that provide care to low-income Californians.

The nonprofit health insurance company said it will limit profits to no more than 2 percent of revenue, and will apply the pledge retroactively to income earned in 2010 when its net income exceeded the 2 percent target by $180 million.

Health insurance premium credits to be issued in October

About $167 million will be distributed to individual and group health insurance policyholders in the form of premium credits for the month of October. The average individual customer will be credited about $80 and an average family of four will be credited about $250, the company said. For group customers, the average credit will be $110 to $130 per employee. For small groups of two to 50 employees, the average credit will be $125 for one employee and about $340 for a family of four.

In addition, Blue Shield will provide $10 million to hospitals and physician groups to help them participate in accountable care organizations, and will give about $3 million to the Blue Shield of California Foundation, which provides grants to nonprofit health care organizations that serve low-income Californians.

Catalyst of Blue Shield of California rebates

Blue Shield came under fire in January when it announced its third major premium hike in less than a year. Consumer Watchdog and other consumer advocates also recently criticized the company for its executive salaries, noting that CEO Bruce Bodaken earned $4.6 million in 2010.

U.S. Health and Human Services Secretary Kathleen Sebelius applauded Blue Shield's decision to give consumer rebates.

"While such voluntary efforts are great for Blue Shield's policyholders in California, today's announcement also reinforces the importance of the Affordable Care Act and rigorous state review of insurance rates," she said in a media statement.

Health care reform requires insurers to justify unreasonable premium increases and post information on the Web for the public. It also requires health insurers to spend a certain percentage of premiums on health care and health care quality improvement.

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