Blue Shield Agrees To Postpone Scheduled Premium Increases
On Tuesday, Blue Shield of California agreed to delay for at least 60 days planned premium hikes that were scheduled to take effect on March 1, the Sacramento Bee reports (Calvan, Sacramento Bee, 2/1).
The March rate increase, which would have affected nearly 200,000 individual policyholders, would have been the insurer's third premium hike since October 2010. Some Blue Shield policyholders could see their premiums climb by as much as 59% cumulatively after the three rate increases (Helfand, Los Angeles Times, 2/2).
Background
Last month, Insurance Commissioner Dave Jones (D) asked four major health insurers to delay their planned rate hikes so the Department of Insurance could have time to review the proposals for accuracy.
Aetna, Anthem Blue Cross and PacifiCare agreed to the delays last week, but Blue Shield initially declined to postpone its plans (Colliver, San Francisco Chronicle, 2/2). The insurer hired an independent actuary to review its filings and pledged to issue refunds if its rates were found to be unsound.
Delay Details
Bruce Bodaken, chief executive for Blue Shield, said the health plan decided to comply with Jones' request to delay its rate increases "to remove any doubt that the rates we have submitted are necessary to pay the medical expenses of our individual members" (Los Angeles Times, 2/2).
Jones in a statement said he is pleased by the insurer's decision.
The delay means Blue Shield's rate increases will not take effect before May. The premium hikes could be further delayed or blocked if state regulators or a third-party actuary find problems with Blue Shield's plans (Sacramento Bee, 2/2).
Insurance Commissioner's Authority
California's insurance commissioner can review rate filings for accuracy and compliance with a new federal law requiring insurers to spend at least 80% of premiums on medical care or quality improvement. However, the commissioner does not have control over the amount premiums are increased (San Francisco Chronicle, 2/2).
Assembly member Mike Feuer (D-Los Angeles) said he hoped the controversy over Blue Shield's rate increases would help him pass a bill (AB 52) that would authorize the commissioner to reject premium hikes. Similar legislation has failed three times in four years (Los Angeles Times, 2/2).
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