Blue Shield of California wants 59 percent rate hike; State wants a delay

Blue Shield of California is seeking to increase rates by as much as 59 percent starting March 1, but new Insurance Commissioner Dave Jones has called for the rate hikes to be delayed 60 days.

The insurer said that 193,000 policyholders would see increases averaging 30 to 35 percent, and nearly one-quarter of the affected customers--44,000--will see cumulative increases of more than 50 percent over five months, the Los Angeles Times reports.

The Blue Shield hikes come in three phases--on Oct. 1, 2010; Jan. 1, 2011; and March 1, 2011--but many policyholders will feel the cumulative impact of all three hikes. Blue Shield said the increases were caused by higher payments for hospitals, physicians and prescription drugs, as well as new requirements under the healthcare reform law and a new state law that bars insurers from charging women more than men, according to Becker’s Hospital Review.

Jones can only block the hike under a narrow set of criteria. He said the growing bills show the legislature should give his office the ability to regulate health insurance the way it does auto insurance, notes the San Francisco Gate.

"Blue Shield's increases pose the same problem posed by Anthem Blue Cross last year and other health insurers as well," Jones told the Times. "My hope would be that Blue Shield would re-examine these rate hikes, particularly in the face of the impact they are having on individual policyholders."

Despite the large rate increases, Blue Shield spokesman Tim Epstein said the insurer would again lose "tens of millions of dollars" on its individual business in 2011, the Times reports.

Blue Shield did not respond immediately to Jones' call for delay, but said the three rate increases have little to do with the new federal healthcare reforms. "These rates reflect trends that were building long before health reform," the company said. "Our individual-market medical costs are rising rapidly due to higher provider prices, increased utilization, and the fact that healthier people are dropping coverage during a bad economy."

To learn more:
- see the Los Angeles Times stories on the rate increase and the call for delay
- read the San Francisco Gate article
- view the Becker’s Hospital Review piece

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