June 20, 2012

Blue Cross and Blue Shield of Louisiana Customers Benefit from More Premiums Spent on Healthcare

Health insurer exceeds government minimums by $72 million

Blue Cross and Blue Shield of Louisiana and its subsidiaries spent $72 million more on their customers’ healthcare in 2011 than healthcare reform requires, company officials reported today.

“We work every day to give Louisiana access to high-quality healthcare that’s affordable,” said Mike Reitz, president and CEO. “For our customers, a big part of that service is maximizing each dollar they pay in premiums.”

The Patient Protection and Affordable Care Act, or healthcare reform, requires that insurers meet spending requirements or else pay rebates to customers. Because Blue Cross managed its customers’ premium dollars well, spending a high percentage on their healthcare and a low percentage on administrative costs, it is not required to issue rebates to its customers in 2012.

Even though Blue Cross is a customer-owned health insurance company without stockholders, the federal government still holds the insurer to the same spending standards as large, for-profit insurers. Under healthcare reform, insurers must account for how much they spend on customers’ care by each type of business: individual, small group and large group.

For example, insurers must spend 80 percent of the total premiums received from individual customers on healthcare and improving quality of care. Individual customers are those who pay for their own insurance and hold their own policies.

Insurers must spend 80 percent of the total premiums paid by small groups, and 85 percent of the total premiums paid by large groups on healthcare and improving quality of care. Groups are mostly employers, and their customers are the employees and their families who get their health insurance through work. Small groups have fewer than 100 employees; large groups have more than 100.

Federal officials have estimated that many other insurers will owe hundreds of millions of dollars in refunds to their customers.

Even though it surpassed reform requirements and does not have to issue refunds, Blue Cross must send notices to customers informing them that it will not issue refunds. Those notifications will take place later this year.

About Blue Cross and Blue Shield of Louisiana
Founded in New Orleans in 1934, Blue Cross and Blue Shield of Louisiana is the oldest and largest Louisiana-based health insurance company. Blue Cross is a private, fully taxed mutual company, owned by policyholders—not shareholders—and governed by a local Board of Directors. It is an independent licensee of the Blue Cross and Blue Shield Association.

The company and its subsidiaries provide group and individual health insurance plans, life and disability insurance, group voluntary products and administrative services to more than one out of every four Louisiana residents. With headquarters in Baton Rouge and eight district offices, Blue Cross and Blue Shield of Louisiana employs more than 1,900 Louisianians who are committed to improving the lives of its customers by providing them with health guidance and affordable access to quality care.

Learn more on the company's website at www.bcbsla.com or on Facebook at www.facebook.com/bluecrossla. Follow Blue Cross on Twitter at www.twitter.com/BCBSLA and CEO Mike Reitz at www.twitter.com/MikeReitzCEO