On Thursday, Insurance Commissioner Dave Jones (D) sent a letter urging Blue Shield of California to delay controversial rate hikes for at least 60 days after they are scheduled to take effect on March 1, the Los Angeles Times reports.
Jones said he wants to investigate Blue Shield's plan to raise premiums for nearly 200,000 individual policyholders through a series of three rate hikes. The cumulative increases could total as much as 59% for some policyholders (Helfand, Los Angeles Times, 1/6).
Rate Hike Details
On Oct. 1, 2010, Blue Shield imposed premium increases averaging 18% and as high as 29% (California Healthline, 1/6). The insurer then raised rates by an average of 1% on Jan. 1.
Earlier this week, Blue Shield announced plans to hike premiums by an average of 30% on March 1 (Calvan, Sacramento Bee, 1/7).
The insurer said its premium increases stem from rising health care costs, increased use of services and more members dropping coverage during the recession. It also said its rates comply with a new federal requirement mandating that insurers must spend at least 80% of premium revenue on medical care (Los Angeles Times, 1/6).
As the state's insurance commissioner, Jones can work to ensure that health plans comply with the requirement to spend at least 80% of premium revenue on medical care. However, he does not have the authority to block rate increases.
Jones said, "We've seen 10, 20, 30, 40, 50 percent increases year over year, and it underscores why I need the authority to be able to reject excessive premium increases" (Colliver, San Francisco Chronicle, 1/7).
Sebelius Weighs In
In a statement responding to Blue Shield's announcement, HHS Secretary Kathleen Sebelius said, "The people of California have a right to be concerned when they see this kind of rate increase month after month."
She added that consumers would see more rate increases "without public scrutiny" if the federal health reform law were repealed (Mohajer, AP/San Jose Mercury News, 1/6).
Proposed Bill Would Boost Insurance Regulation
In related news, Democrats in the California Legislature say the controversy over Blue Shield's premium increases could help rally support behind a new bill (AB 52), by Assembly member Mike Feuer (D-Los Angeles).
The legislation would authorize the insurance commissioner to approve or reject health insurance rate hikes in the same way that he regulates automobile and homeowner insurance policies (Los Angeles Times, 1/6).
For additional coverage of Feuer's bill, see today's Capitol Desk post.