Blue Shield of California is seeking premium increases of as much as 20% for some individual policyholders, the Los Angeles Times reports.
According to filings with state regulators, Blue Shield is proposing an average rate increase of 12% for more than 300,000 individual policyholders, effective in March 2013.
California officials are examining the rate hike proposal but do not have the authority to reject it.
Criticisms of Rate Hike Proposal
Some consumer advocates and health care economists say that Blue Shield should not seek such a high increase when it has a reserve of $3.9 billion.
Laurie Sobel -- a senior attorney for Consumers Union in San Francisco -- said, "Blue Shield is sitting on a huge surplus" that "should be used to hold down rate increases [that hit] extraordinary levels."
Blue Shield's Response
In response to criticisms, the insurer said that its reserves have nothing to do with rate hikes and that its funds have been set aside for the future benefit of policyholders.
Lindy Wagner, a Blue Shield spokesperson, said "Reserves are needed to ensure our members' claims can be paid no matter what," adding, "We need them to protect against uncertainties like a pandemic or another [economic] crisis."
The insurer said it expects to lose money in the individual market next year even with the proposed rate hikes. Officials said that medical costs for the individual market have increased by 10.6%, while the amount that the insurer actually pays for individuals is increasing by 12.5% (Terhune, Los Angeles Times, 12/13).