State Criticizes Blue Shield’s Rate Hike for Individual Policyholders
On Thursday, California Insurance Commissioner Dave Jones (D) criticized Blue Shield of California for increasing premiums for hundreds of thousands of individual policyholders, the Los Angeles Times reports.
California regulators can investigate rate hikes but do not have authority to reject the increases.
Rate Hike Details
On March 1, Blue Shield raised rates by as much as 20% for about 268,000 individual policyholders.
Jones said that he had asked the insurer to impose a smaller increase that would have saved policyholders about $16.5 million, but Blue Shield declined to do so (Terhune, Los Angeles Times, 3/7).
Also on March 1, the insurer raised rates for about 27,000 individual policyholders by an average of 11.8%. Brent Barnhart -- director of the Department of Managed Health Care -- said that the 11.8% rate hike is unreasonable and unsupportable based on the insurer's historical and projected medical trends and assumptions of utilization of care (California Healthline, 3/7).
Discussing Blue Shield's rate hike for 268,000 individual policyholders, Jones said, "These are the types of rate hikes that are unsustainable for California consumers" (Los Angeles Times, 3/7).
According to Jones, a state Department of Insurance review of the rate increase found that Blue Shield overestimated how much health care its policyholders would use.
Response From Blue Shield
Steve Shivinsky -- a spokesperson for Blue Shield -- said that the rate hike "is an accurate reflection of the costs we're projecting for 2013 expenses."
He said that rising medical costs were a factor in determining the premium increase.Shivinsky said, "If you want to look at what's driving costs, it's the rising cost of delivering the care. It's the cost of hospital, pharmaceutical care, the cost of (medical) implants," adding, "The percentage of costs that can actually be attributed back to the insurer is minimal" (Colliver, San Francisco Chronicle, 3/7). 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.