Blue Shield of California’s 2% Max Profit Commitment to Their Members

Blue Shield of California, as opposed to Anthem Blue Cross, is a non-profit health insurance carrier. That affects their mentality. It keeps them more devoted to their members as opposed to being committed to investors who push for higher profits. Blue Shield has fought for affordability and quality of care. And, this is part of the reason Blue Shield has committed to its members never to have profits over 2%.

Commitment for Income Not to Exceed 2%

Blue Shield of California Chairman & CEO, Bruce Bodaken made this 2% Commitment in 2011. At that time, the health insurance carrier made the decision also to pay rebates retroactively for 2010. In 2010, Blue Shield had made profits of $180 million over the 2% mark, so they paid this excess back to their members.

This was a big commitment! Blue Shield of California is one of the leading health insurance carriers in the state, ranking #1 in 2016 for enrollments in the Covered California Health Care Marketplace. Blue Shield is leading the way when it comes to enrollment off-exchange as well as membership on Obamacare California plans.

Big Membership, Big Revenue

Blue shield has over 3.5 million members and took in revenue of $13.4 billion in 2014. Their net income in 2014 was $162 million, which came out to 1.2% profit. If the income had been higher than 2%, Blue Shield of California would have paid out the excess profits to their members in the form of rebates. One Blue Shield representative admitted that they try to keep the profits below 2% because it’s expensive to cut checks for all those rebates.

That’s still good for Covered California Blue Shield members. Any profits over 2% are either going to go out in rebate checks or will be invested into the company to improve care and service for Blue Shield members.