Of the 319 insurers offering Obamacare coverage in 2014, the most profitable was a nonprofit health plan, Blue Shield of California, according to a government report released last week.
Issued by the federal agency overseeing the health reform law, the report details excess profits and losses reported by every insurer offering coverage in 2014 to individuals through the Obamacare exchanges.
Blue Shield reported $107 million in excess profit, which accounted for almost a third of the $362 million total for all insurers. Kaiser Foundation Health Plan in California, also a nonprofit, posted the second-highest excess profit--$66 million.
The figures were reported in connection with a “rate stabilization” program under the health reform law that requires insurers to relinquish excess profits on Obamacare coverage, which are then used to compensate insurers with big losses. Blue Shield remitted $107 million under the program.
ENROLLEES are footing the bill
Since Blue Shield deducted the $107 million from payments it made to enrollees in accordance with Obamacare rebate requirements, policyholders are bearing the cost.
Under the health reform law, insurers must return money to enrollees whenever they devote less than 80% of premiums to medical care or more than 20% to profit and administrative costs.
Blue Shield missed the mark on coverage it sold to individuals in 2014. In September, it rebated $64 million, but that was after deducting the $107 million excess-profit assessment. As a result of the deduction, rebate checks were reduced by an average of $223 per enrollee.
BLUE SHIELD should pay
As it stands now, Blue Shield’s policyholders are paying a $223-per-person penalty because Blue Shield overcharged them and made too much money. Even in the world of health insurance, that’s outrageous. Blue Shield, not its customers, should be paying the excess-profits assessment.
Blue Shield is a nonprofit health plan and is sitting on billion of dollars in reserves. It needs to do right by its customers and immediately return the $107 million it deducted from their Obamacare rebate checks.