Blue Shield of California has agreed to rescind an announced cancellation of group medical insurance for about 1,500 members of six University of California alumni associations and will extend the coverage for at least a year at roughly a 50% rate increase, it was announced Wednesday.
John E. Kobara, executive director of the UCLA Alumni Assn., said that under an agreement he reached with Blue Shield officials, the annual rate for a single Los Angeles area individual, age 45 to 54, would increase from about $2,000 to about $3,000, while the rate for a family of three would increase from $4,000 to about $6,000.
Kobara said that rates are lower for residents elsewhere in the state but that all will be subject to roughly the same percentage increase.
About 850 of the policyholders are members of the UCLA Alumni Assn., while the others belong to alumni associations from UC campuses at Irvine, Davis, Santa Cruz, San Diego and Santa Barbara.
A Blue Shield spokesman at the insurer's San Francisco headquarters confirmed Kobara's remarks and said letters outlining the policy extension, the rate increases and other health insurance options will go out from the alumni associations, with Blue Shield's help, shortly.
Blue Shield, without givingany reason, notified the policy-holders in letters earlier thismonth that their coverage was being canceled effective Dec. 1. The letters told them that they could apply for individual coverage, which would be granted depending on their personal health, or they would automatically qualify for a conversion plan. The letters did not mention that the conversion plan would contain far fewer benefits.
Later, company spokesmen said the reason for the cancellation was that claims under the policies had risen so dramatically that a 60% rate increase would have been needed to continue them. Rather than do this, Blue Shield decided to do away with the policies altogether.
Agreement on extension of the policies came in a series of discussions between Blue Shield officials and Kobara after the alumni association director wrote the health insurer. He complained that the cancellation reflected "little professionalism, poor planning and no apparent concern for the welfare" of the people affected.
He pointed out that policyholders who were not in good health would not be able to obtain coverage equal to what they had before.
On Wednesday, Kobara said he had subsequently found Blue Shield officials to be "extraordinarily cooperative" and that he considers the agreement to be a victory for the policyholders.
Blue Shield spokesman Ken Duchscherer said the insurer is also satisfied with the agreement but noted that due to the rate increase, the extension is "not something done painlessly" as far as the policyholders are concerned.