North Carolina's largest health insurer said Friday it expects to reimburse about 700,000 customers after administrative and other costs outstripped a limit allowed by the health care overhaul law championed by President Barack Obama.
Blue Cross and Blue Shield of North Carolina will for the first time provide rebates required by the Affordable Care Act when insurers fail to limit administration, marketing and profits to 20 percent or less of premium dollars. Insurers must spend at least 80 percent of premiums on providing medical care, rising to 85 percent for large-group plans.
"It's going to be really close to 80 percent," Blue Cross Chief Financial Officer Mitch Perry said in a conference call with reporters.
Rebates averaging less than $75 per member will go to customers with individual, student and small-group policies later this year, the Durham-based nonprofit company said.
About 6 million U.S. consumers have received similar rebates averaging $119 per person since 2012, according to the U.S. Centers for Medicare & Medicaid Services. Smaller insurers had sent rebates averaging $39 per person to almost 113,000 North Carolina customers, according to reports filed with the government agency through November.
The Durham-based nonprofit company earned $685 million in profits in 2018 and collected $9.1 billion in premiums. It collected an average of $6,900 in total premiums and spent $5,326 in claims per insured customer, the company said. Blue Cross has more than 3.7 million members.
The company had at least 10 executives who were paid more than $1 million, topped by CEO Patrick Conway who was paid $3.6 million in salary, bonus and other compensation.
Blue Cross saved about $120 million last year as a result of the corporate tax cut and started channeling some of the benefit into improved policy pricing starting in the last three months of last year, spokeswoman Darcie Dearth said. The company used part of its windfall from the federal tax to give charities $50 million and used $5 million for employee bonuses, Perry said.
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