U.S. Health Secretary Kathleen Sebelius said the decision of Blue Shield of California to limit its profits is “a great step forward in lowering costs” for health reform.

Kathleen Sebelius

Selebius’ statement, reflecting the view of the Obama Administration, was issued hours after the nonprofit insurer’s president and CEO, Bruce Bodaken, said his company would cap its profits at 2% of net income. The Blue Cross Blue Shield Association licensee is the first insurer to cap profits, a move that follows the state giving its insurance commissioner the right to regulate health insurance rates.

Sebelius and the Obama Administration have been complaining about insurers’ profits for more than two years since the debate over health reform began.

“We applaud Blue Shield of California’s decision to limit their profits and give $180 million back to policyholders, physicians and hospitals,” Sebelius said in the statement. “This is a great step forward in lowering costs for the people of California and we are pleased that Blue Shield is committed to providing better care at prices that better reflect underlying medical costs. While such voluntary efforts are great for Blue Shield’s policyholders in California, today’s announcement also reinforces the importance of the Affordable Care Act and rigorous state review of insurance rates.”

Sebelius’ office has given almost every state grants to help them review what the administration calls “excessive” premium increases, which they say are any exceeding 10%.