Blue Shield To Proceed With Rate Hike, Hire Independent Actuary
On Friday, Blue Shield of California announced that it would not delay recently announced premium increases, despite a request from Insurance Commissioner Dave Jones (D), the Sacramento Bee reports.
Background on Rate Hikes
Earlier this month, Jones asked Blue Shield to delay for 60 days a rate hike that was scheduled to take effect in March (Calvan, Sacramento Bee, 1/15)
The March rate hike would be the insurer's third premium increase since October 2010 (Helfand, Los Angeles Times, 1/15). The threeÂ increases could total as much as 59% and are aimed at nearly 200,000 Blue Shield policyholders in the individual health insurance market.
Jones later asked Aetna, Anthem Blue Cross and PacifiCare to also delay their planned rate increases (Sacramento Bee, 1/15).
Hiring an Actuary
Also on Friday, Blue Shield said it would voluntarily submit its rate hike plans for independent actuarial review and issue refunds to policyholders if the actuary finds the rates to be unsound.
The review will be conducted by Axene Health Partners, which has conducted independent reviews of rate filings for the California Department of Insurance (Rauber, San Francisco Business Times, 1/14).
Last year, Axene Health Partners uncovered several calculation errors in a rate filing submitted by Anthem Blue Cross, which was seeking to raise rates by as much as 39% for about 700,000 individual policyholders. Anthem pursued a smaller rate increase following the review (Sacramento Bee, 1/15).
Reasoning for Rate Hikes
Blue Shield CEO Bruce Bodaken said the premium increases are necessary because of rising health care costs (Wohlsen, AP/Ventura County Star, 1/14).
Blue Shield estimates that it will lose between $20 million and $30 million on individual policies this year. The insurer said that costs for hospitals, physicians and prescriptions have risen by an average of 15% annually over the past three years (Sacramento Bee, 1/15).
Jones does not have the authority to force Blue Shield to comply with his request to delay its rate hike for 60 days. The insurance commissioner also has limited power to block premium increases.
However, Jones said that Department of Insurance actuaries still plan to conduct a "full and complete review" of Blue Shield's March rate increase (Los Angeles Times, 1/15).
Headlines and links to editorials on Blue Shield's rateÂ hikes are provided below.
- "Some Teeth for Dave Jones" (Los Angeles Times, 1/18).
- "Review Blue Shield's Unhealthy Rate Increases" (San Francisco Chronicle, 1/18).