Blue Shield Calls Off Plan To Impose Premium Rate Increase in May
On Wednesday, Blue Shield of California announced it would cancelÂ planned May 1 rate increases that could have affectedÂ 340,000 individual and family policyholders, the San Francisco Business Times reports (Rauber, San Francisco Business Times, 3/16).
The insurer also said it would not impose additional rate increases for the remainder of the year.
Not-for-profit Blue Shield's proposed rate hike for individual policyholders would have averaged 6.5% and reached as high as 18% (Helfand, Los Angeles Times, 3/16). The decision to cancel the planned increases could saveÂ members up to $40 million this year (San Francisco Business Times, 3/16).
The health plan increased its rates in October 2010 and in January. If the May rate hike took effect, some policyholders would have faced cumulative increases reaching nearly 87% (Colliver, San Francisco Chronicle, 3/17).
Blue Shield is not rescinding the October and January rate hikes, which averaged 23%.
Reasons for Cancellation
The insurer said it withdrew the rate increases because of concern for policyholders (Los Angeles Times, 3/16).
In a statement, Blue Shield Chair and CEO Bruce Bodaken said, "By agreeing to not raise rates this year, we are helping to make coverage more affordable for our members during tough economic times. It's a financial risk for us, but a risk that's worth taking" (Wisenberg Brin, Dow Jones/Wall Street Journal, 3/16).
According to the Times, another factor that might haveÂ influenced Blue Shield's decision is that the company is paying out less for medical claims than it had anticipated.
Company officials said that policyholders are visiting their physicians less and that many have switched to cheaper plans, requiring them to be responsible for a greater share of their health care costs.
Insurance Commissioner Dave Jones (D) praised the insurer for canceling the premium increases. He said he hoped other insurers that have proposed increases -- including Aetna, Anthem Blue Cross and PacifiCare -- would note Blue Shield's action (Los Angeles Times, 3/16).
Consumer advocates, though pleased with Blue Shield's decision, said the insurance commissioner should have more power to regulate health plan rates (San Francisco Chronicle, 3/17).
State law does not give Jones the authority to stop excessive rate proposals from health plans.
Jones supports legislation (AB 52), by Assembly member Mike Feuer (D-Los Angeles), that would give the state Department of Insurance and Department of Managed Health Care authority to approve or reject rate increases (Robertson, Silicon Valley/San Jose Business Journal, 3/16).
For additional coverage on Blue Shield's decision to cancel its planned May rate increase, see today's Capitol Desk post.This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.