Review Finds Blue Shield’s Planned Rate Hikes To Be Reasonable
Blue Shield of California recently announced that a review by an outside consultant found its planned rate hikes for nearly 200,000 individual policyholders to be reasonable, the Los Angeles Times reports.
Still, the premium increases are on hold while state regulators examine the plan (Helfand, Los Angeles Times, 3/1).
Background
The rate increase, scheduled to take effect on March 1, would have been the insurer's third premium hike since October 2010.
Earlier this month, Blue Shield agreed to postpone its planned premium hikes for at least 60 days as requested by California's Insurance Commissioner Dave Jones (D) so the Department of Insurance could have time to review the proposals for accuracy.
Some Blue Shield policyholders could see their premiums climb by as much as 59% cumulatively after the three rate increases (California Healthline, 2/2).
Review Details
The independent auditor, Axene Health Partners, said the pending rate hikes -- averaging 6.5% and as high as 18% -- "are reasonable, not excessive and meet the requirements of the California Department of Insurance, in addition to requirements of" the federal health reform law.
David Axene, president of Axene Health Partners, said that "it should not be surprising to see premium rates increasing at or around the 18.5% level" given that health care costs are increasing significantly.
Axene added that calculations show that Blue Shield in 2011 and 2012 will meet a federal requirement that insurers spend at least 80 cents of each premium dollar on health care for members.
Commissioner Responds
On Monday, Jones expressed skepticism about the review and said that Blue Shield has not yet fully answered questions he raised about its filing, the Times reports.
Jones said the report from Axene Health Partners does not resolve the issue (Los Angeles Times, 3/1).
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