5 + 9 = 59, Blue Shield Takes a Turn at Rate Increases

Blue Shield of California has announced their intention to raise rates in the individual market up to 59% on March 1, 2011. Blue Shield raised rates on its 193,000 individual plan holders on October 1, 2010 and again on January 1, 2011. A March increase will bring the total increase in rates up to 59% in a 5 month period.

Blue Shield cited increased provider costs and… policy holders actually using their benefits as a reason for the increase (it is unclear whether customers can avoid a rate increase if they promise never to use their insurance). A Blue Shield spokesperson stated that utilization had increased up to 5% and costs had increased up to 9%, thus necessitating the 59% increase in premiums.
Newly elected Insurance Commissioner Dave Jones called upon Blue Shield to delay the increases by 60 days in order to allow thorough review of the rate filing. Jones will have help checking Blue Shield’s math, if needed, from Secretary of Health and Human Services Kathleen Sebelius, as per rate review provisions of the ACA, HHS stands ready to assist states in ensuring adequate rate review.
Last year Health Access and many other consumer advocates supported legislation, AB 2578 (Jones), that would have given the Insurance Commissioner authority to reject unreasonable rate increases, but that bill failed to make it through the Legislature. Another bill, AB 2042(Feuer), sponsored by Health Access California but vetoed by Governor Schwarzenegger, would have prohibited insurers from raising rates more than once per 12 month period. Both are policies that the California legislature should revisit.
Today’s news from Blue Shield draws further attention to the need for regulation of insurance rates.
Health Access California promotes quality, affordable health care for all Californians.

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