Covered California Losses Cited by Blue Shield for Labor Day Workload Adjustment

Blue Shield of California is shutting down for the four days after Labor Day to reduce its payroll-related liabilities, citing losses in California’s Covered California Obamacare exchange and other commercial and individual lines of business.

The move will affect most of its 6,000 employees in California, except about 1,000 who work for Care1st, which it acquired last fall for $1.2 billion, and some staffers in customer service and related areas who will remain on the job. The exact number of workers involved hasn’t yet been tabulated, according to the San Francisco-based insurer.

“This is certainly not normal for us,” said spokesman Steve Shivinsky. “We’re definitely seeing some income challenges as of mid-year,” with claims in the individual and other markets “greatly exceeding the revenue we’re taking in.”

The move could save Blue Shield an estimated $4 million, by reducing its liabilities for paid time off.

Staffers are being required to use paid-time-off from September 6 to 9, Shivinsky confirmed. He said health plans nationally are facing challenges in the individual market and on the Obamacare exchanges, and some have said they plan to exit or cut back their participation, but Blue Shield isn’t taking that step.

Paul Markovich is Blue Shield’s chief executive officer.

UnitedHealth Group (NYSE: UNH) said last month it planned to exit most Obamacare markets. Aetna (NYSE: AET) said it’s reconsidering its presence in individual Affordable Care Act markets in 15 states, and Humana (NYSE: HUM) is pulling back as well.

Paid time off is a liability on the nonprofit health plan’s books, and it wants to reduce that before year-end. Because open enrollment consumes the last few months of each calendar year, Blue Shield decided to ask employees to take extra time off in September, not later in the year, Shivinsky said.

Some customer service representatives and staffers who work in open-enrollment, information technology and medical services will still be expected to be on the job during that period.

Last month, Blue Shield said it was raising its Covered California rates by nearly 20 percent next year, citing the high costs of covering enrollees. It said it drastically underpriced premiums for the state’s Obamacare exchange.

And in late February, the San Francisco insurer said it planned to cut about 460 jobs, most of them in Sacramento and the Central Valley. The actual number of jobs eliminated was close to 400, Shivinsky said late Thursday afternoon.

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