INSURANCE RATES: CA Premiums Soar After Years Below National Average
Most California insurers and HMOs have announced significant premium rate hikes for 2000, the second year in a row in which the companies have scrambled to recover from "price wars fueled by employers' rapidly shifting into managed care to control benefits costs." The Los Angeles Times notes that historically, California rates have been up to 30% lower than those in other parts of the country due to greater managed care competition. And while the recent increases have drawn the ire of consumer advocates, the Times notes that they actually "hover close to" the 6.5% federally forecasted health care inflation rate. Consumers for Quality Care Director Jamie Court characterized both the recently secured CalPERS rate hike and the year 2000 projections across the state as "a demonstration that HMOs have neither managed care nor managed costs." Some of the announced increases: Cigna HealthCare of California and Wellpoint Health Networks both intend to raise rates 5% to 8%. Outside of California, Wellpoint rates will go up 7% to 9%. Kaiser said it will increase premiums "from the high single digits to the low double digits" to help offset cost inflation and massive losses in recent years. Insurers are not unaware of the downsides: "We have to cover costs and make a profit, but we're well aware that every time we raise premiums, that prices some people out of the market," said Jim Harris, a spokesman for Cigna's California operations. "Premium increases are not a panacea," seconded John Cygul, Wellpoint's chief of investor relations. The Times notes that it remains to be seen whether the increases will be passed along to individuals (Bernstein, 6/4)
Blues' Individual Plans
Speaking of individuals, Blue Cross of California notified 790,000 (85%) of its individual health plan customers last week of 19% average premium increases beginning July 1 -- between 4.5% and 40%, depending on individual policy, the Sacramento Bee reports. The increases, which Blue Cross attributed to a 15% rise in pharmaceutical costs, have already resulted in an onslaught of more than 100 calls to the California Department of Corporations, which says it has "no legal authority to control premiums." Other factors driving up costs include health care inflation and an increase in expensive medical procedures. The hardest hit, as the heaviest users of health insurance, will be families with children. Dale Waters, president of Sacramento-based health insurance consulting firm Benefit Insurance Services, said, "A lot of people are taking the increase in stride because they don't have any options. It's kind of a seller's market." But Walter Zelman, President and CEO of the California Association of Health Plans, said, "This is the first time premiums have really gone up in several years. We just hope it doesn't have to continue" (Swett, 6/2).