Blue Shield of California Limits Annual Net Income to 2% of Revenue

Blue Shield of California has said the health insurer will limit its annual net income to 2 percent of revenue, a pledge that takes effect for the company's 2010 revenue, according to an American Medical News report.

According to the report, Blue Shield will credit $167 million of its 2010 income to current policyholders, who can put the credits toward future purchases with Blue Shield. Individual subscribers will receive credits ranging from $25-$160, while families of four will receive credits from $130-$145. Employers will receive $110-$130 in credits to put toward workers' coverage payments.

The company will also put $10 million toward funding accountable care organizations and $3 million toward funding public health through its charitable foundation. The decision to distribute these funds was announced June 7 in a speech delivered at the Commonwealth Club in San Francisco.

Blue Shield's pledge to limit net income to 2 percent will apply only as long as the company remains financially solvent, according to the report. If Blue Shield lacks the funds to make future investments, the company may have to raise rates.

Read the American Medical News report on Blue Shield of California.

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