Advertisement
YOU ARE HERE: LAT HomeCollectionsFixme

Blue Shield of California is asked to delay rate hikes for 60 days

California's new insurance commissioner says he wants to closely examine the latest increases slated for thousands of individual policyholders.

January 06, 2011|By Duke Helfand, Los Angeles Times

California's new insurance commissioner called for health insurer Blue Shield of California to delay controversial new rate hikes for 60 days, saying recent increases by the industry were alarming.

On the job since Monday, Commissioner Dave Jones said he wants to closely examine Blue Shield increases planned for nearly 200,000 individual policyholders, whose rates would rise for the third time since October — some as much as 59% total.

"I believe the premium increases are unsustainable," Jones said, referring to successive hikes in recent years by Blue Shield and its competitors in California. "I think we need to scrutinize everybody."

As Jones urged Blue Shield to freeze Jan. 1 and March 1 increases, news of the hikes drew sharp criticism from consumer groups, members of Congress and the Obama administration.

Health and Human Services Secretary Kathleen Sebelius seized on the issue Thursday ahead of an effort by congressional Republicans to repeal the Obama administration's healthcare overhaul.

"The people of California have a right to be concerned when they see this kind of rate increase month after month," Sebelius said in a statement. "We have reached out to Commissioner Jones and know he is doing everything in his power to help consumers. We stand ready to assist him and the people of California in any way that we can."

The San Francisco-based insurer did not respond immediately to a letter from Jones seeking the delay or to the comments from Sebelius and five Democratic members of Congress from California.

But in a statement before the commissioner made his request, Blue Shield said that the three increases are the only ones in a period of more than a year and that they have little to do with the new federal healthcare reforms.

Policyholders got a break last year when Blue Shield had to delay its annual July increases for three months, to Oct. 1, while an independent actuary for the state looked over its filing. The attention came after state regulators scrutinized a plan by Anthem Blue Cross to raise rates as much as 39%.

"These rates reflect trends that were building long before health reform," the company said. "Our individual market medical costs are rising rapidly due to higher provider prices, increased utilization, and the fact that healthier people are dropping coverage during a bad economy."

Blue Shield said that, even with the rate hikes, it expects to lose "tens of millions of dollars on its individual healthcare business in both 2010 and 2011."

The company added that its rates meet a new federal healthcare requirement for insurers to spend at least 80% of premiums on healthcare expenses.

Democrats in the state Legislature were hopeful that the flap over Blue Shield's rates would help propel a new bill — AB 52 — that would give the insurance commissioner authority to approve or reject rate increases as he can with auto and homeowner policies.

Currently, the commissioner can only review rates and block those in cases where insurers do not spend at least 70% of premiums on healthcare.

"Health insurers should be required to justify their reasons for raising rates that could cause even more families to lose their coverage," said state Assemblyman Mike Feuer (D- Los Angeles), who wrote the bill. "If insurers can't sufficiently justify increases, then state regulators should have the authority to reject them."

duke.helfand@latimes.com

Advertisement
Los Angeles Times Articles
|
|
|