Blue Shield Of California Seeks Huge Rate Hikes
SAN FRANCISCO (AP) -- Blue Shield of California is seeking another round of rate hikes that would mean a cumulative increase averaging over 30 percent over a five-month span for nearly 200,000 policy holders, reports Wednesday said.
The latest hike was set to take effect March 1 pending approval from California regulators, to go with other increases that took place Oct. 1 and Jan. 1, the Los Angeles Times reported.
KCBS' Betsy Gebhart Reports:
Some 193,000 policyholders would see increases averaging 30 percent to 35 percent if the new increase is approved.
The news astounded many policy holders who are guaranteed the same rate for a year and received notice of all three increases at once.
Tens of thousands of policy holders will see their rates go up more than 50 percent in the same span.
They include Michael Fraser, 53, a freelance advertising writer from San Diego, who recently learned his bill would climb from $271 to $431 — an increase of 59 percent.
"When I tell people, their jaws drop and their eyes bug out," said Fraser, 53, a freelance advertising writer. "The amount is stunning."
The San Francisco-based insurer blames the new rates on rising health care costs.
"We raise rates only when absolutely necessary to pay the accelerating cost of medical care for our members," the company told customers last month.
Thursday, Blue Shield issued a statement on the rate hikes:
The rate increases reported today cover a period of more than one year and have almost nothing to do with the federal health reform law. These rates reflect trends that were building long before health reform. 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. Health reform will help slow down this trend by expanding coverage, which will keep healthier people in the system, and through quality and cost containment initiatives such as the Independent Payment Advisory Board, Center for Medicare and Medicaid Innovation, Patient-Centered Outcomes Research Institute and other incentives for prevention and coordinated health care.
Even with these rate increases, Blue Shield of California expects to lose tens of millions of dollars on its individual healthcare business in both 2010 and 2011. These new rates meet the federal requirement that 80 percent of premiums are spent on healthcare expenses.
New California Insurance Commissioner Dave Jones can only block the hike under a narrow set of criteria.
He said the growing bills show that the legislature should give his office the ability to regulate health insurance the way it does auto insurance.
"Blue Shield's increases pose the same problem posed by Anthem Blue Cross last year and other health insurers as well," Jones said in an interview. "My hope would be that Blue Shield would re-examine these rate hikes."
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