Dive Brief:
- Blue Shield of CA is under pressure to lower prices from two of its biggest customers: the California Public Employees' Retirement System and the state's health insurance exchange.
- Despite its nonprofit status, Blue Shield has $4.2 billion in financial reserves and is charging customers as much or more than its rivals.
- Blue Shield says it plans to remain a nonprofit, but has already lost its state income tax exemption following an audit.
Dive Insight:
Critics say that Blue Shield is not fulfilling its stated mission of making sure its customers have access to high-quality healthcare at an affordable price. "Blue Shield could adjust their premiums lower than for-profit companies and make that one way to fulfill their public mission," Glenn Melnick, a healthcare economist and professor at USC told the Los Angeles Times. "That could stimulate more price competition across the market."
Blue Shield spokesman Steve Shivinsky said that tapping into the company's financial reserves could send the wrong signal to medical providers that they don't need to control their spending. "It's unreasonable to think we would tap the company's savings account to artificially lower our rates," he said.