Regulators and consumer groups in the state of California are currently engaged in a battle with one of the country’s largest insurance companies in an attempt to make them follow through with a promise to pay out to charity. It turns out that in return for approval for a $1.2 billion buyout of Medicaid insurer Care1st Health Plan, Blue Shield promised that it would pay $14 million every year for 10 years to either Blue Shield’s foundation or other charities, in addition to any payments it was already planning on making. While the buyout was a huge deal and this deal was necessary to have it happen, $140 million over 10 years is a lot of money and Blue Shield is trying to get away from that promise.
Blue Shield executives are arguing that the original agreement called for only a minimum donation of $14 million a year and that they weren’t required to go over their normal giving of about $35 million a year. Obviously, both consumer advocates and governmental regulatory committees are not ok with Blue Shield trying to escape its philanthropic requirements and are currently working to force the company to stick to its agreement, especially since it ended up succeeding in its buyout attempts. Shelley Rouillard, director of the Department of Managed Health Care, has also spoken about her disappointment with the firm and has reached out in an attempt to mend the issue so that the philanthropic donations happen.
This isn’t the first time that Blue Shield has recently been in the news. California recently took away the company’s long-held tax exemption for numerous reasons. Among the reasons was the state auditors at the California Franchise Tax Board found that the insurer had $4 billion surplus and was failing to offer more affordable coverage even though it considered itself a nonprofit. Part of this recent push by officials to get Blue Shield to live up to its philanthropic promises is to force the company to act like the nonprofit that it claims to be. The extra donations are the best way to do this and regain the trust of Californian consumers — now we just have to wait and see how the company reacts.
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