Jones Says 10% Blue Shield Premium Rate Hike Is ‘Unreasonable’
For more information on Jones' comments, see today's "Capitol Desk" post.
Details of Hike
The 10% hike went into effect on Jan. 1 and will affect 81,000 policyholders in the state.
According to Jones, the change will amount to an average increase of 32% over a two-year period for individuals with policies that were in place before the Affordable Care Act was enacted and therefore are exempt from its requirements.
State regulators said that Blue Shield's rising expenses have been caused by:
- Overspending on administrative duties; and
- Overstating what the company estimates it will pay for medical claims.
Jones said the state insurance office found a 4% average rate increase to be reasonable, which would save policyholders $10 million annually in premiums compared with the current hike.
However, he added, "Unfortunately, neither federal nor state law provides the authority to reject excessive health insurance rates."
Jones and consumer advocates are supporting a November ballot initiative that would give the state insurance commissioner the ability to deny excessive rate hikes.
Blue Shield's Response
In response to Jones' comments, Blue Shield officials said the 10% increase will offset:
- An 11% increase in the cost of health care for individuals with policies that were in place before the ACA was enacted; and
- New taxes and fees.
In addition, Blue Shield disputed some of the figures used by Jones (Terhune, "Money & Co.," Los Angeles Times, 1/7).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.