Nonprofit Premium Payback Follows High Exec Salary Exposé

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June 12, 2011; Source: The Modesto Bee | Two weeks ago NPQ reported that the CEO of Blue Shield of California was making $4.6 million – more than five times the salary of a CEO running a similarly sized for-profit health insurer.

The comparison came to light just as Assembly Bill 52 was set to be considered in the California Legislature. The bill would give the state the right to regulate health insurance rates.

Now Blue Shield has unexpectedly announced that it is voluntarily refunding all profits over 2 percent to policyholders and care providers. Most of it, $167 million will go to individual and business policyholders. The remaining $13 million will go to care providers and nonprofits.

Some consumer advocates, of course, believe that the move is a part of a last ditch lobbying effort against the bill and the timing does suggest that may be the case. One is forced to ask why a nonprofit insurer would establish rates that would create these kinds of reserves during a recession in which many millions are struggling with their health insurance rates. Maybe that is the motivation for a bill that would not leave rate setting and profit reimbursements up to the company’s “largesse”. —Ruth McCambridge