Blue Shield of California prepares for hundreds of layoffs

Blue Shield of California is preparing to shed hundreds of jobs as it continues to challenge its exclusion from participating in the nation’s largest Medicaid program.

The nonprofit insurer will lay off 373 employees across several sites by Jan. 25, according to a notice Blue Shield filed with the California Employment Development Department. The majority will occur at Blue Shield’s Sacramento-area offices, although the company is also cutting 62 employees from its Oakland headquarters.

The layoffs represent a small portion of Blue Shield’s total workforce of 7,800. The company did not specify to regulators why it was reducing its headcount.

“As a nonprofit health plan, Blue Shield of California is driven by its mission to provide access to quality healthcare that’s sustainably affordable for all. This includes managing administrative costs, operating efficiently and ensuring we have the right talent, skills and capabilities in place. In a challenging economy, we have made the tough decision to reduce our staff,” a spokesperson wrote in an email.

The company is providing assistance to affected workers, including an opportunity to remain on the job for 90 days while they search for new employment, the spokesperson wrote.

The layoffs come as Blue Shield prepares to be dropped from Medi-Cal in 2024. The California Department of Health Care Services implemented its first-ever competitive Medicaid bidding process for insurers this year and, in August, announced that it did not select Blue Shield.

Blue Shield sued the state in October over its changes to the MediCal program.

The insurer has also appealed the state’s decision to award Medicaid contracts to other companies in 13 counties, including large areas such as San Diego County and Kern County, according to data the state released in September. While companies including Centene and CVS Health subsidiary Aetna also filed appeals to the state’s Medi-Cal awards, Blue Shield has submitted the most appeals. The insurer has 4.7 million total members and does not disclose what portion of its membership comes from Medi-Cal.

Blue Shield’s net income fell 65.1% to $237 million last year due to increased benefits costs and administrative expenses, according to its most recent annual report. The company reported $22.9 billion in operating revenue for 2021, a 5% decrease from the previous year.