Blue Shield Seeks Significant Hike In California Health Insurance Rates

Blue Shield of California informed hundreds of thousands of policy holders that their insurance costs could go up as much 59 percent this year.

The Los Angeles Times reports:

San Francisco-based Blue Shield said the increases were the result of fast-rising healthcare costs and other expenses resulting from new healthcare laws.

"We raise rates only when absolutely necessary to pay the accelerating cost of medical care for our members," the nonprofit insurer told customers last month.

In all, Blue Shield said, 193,000 policyholders would see increases averaging 30% to 35%, the result of three separate rate hikes since October.

Nearly 1 in 4 of the affected customers will see cumulative increases of more than 50% over five months.

Last year, also in California, Anthem Blue Cross caused national uproar when it proposed a 39 percent increase for some of its 800,000 customers. The move came at a pivotal moment in the health care debate and arguably gave President Obama ammunition to justify health care legislation. The outrage led Anthem to settle for a maximum  hike of 20 percent.

But to the human side of the story: The LA Times spoke to Michael Fraser, a freelance advertising writer from San Diego. A letter from Blue Shield informed him his monthly premium would increase from $271 to $431. That's a 59 percent hike.

Update at 4:10 p.m.: Johnny Wong, who handles public relations for Blue Shield of California, sent us a statement. In it, Blue Shield says the rate increases have nothing to do with the health reform law and that Blue Shield of California expects to lose "tens of millions of dollars on its individual healthcare business" in 2010 and 2011. They explain the reason for the increases:

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...

Update at 5:50 p.m.: In separate statements, U.S. Health and Human Services Secretary Kathleen Sebelius and California Insurance Commissioner Dave Jones pushed back against Blue Shield. The AP reports:

Jones said in a statement Thursday that he will call for a 60-day delay in the implementation of the rate increases, which are slated to go into effect March 1.

In a statement, Sebelius says she's ready to assist California, and that rate increases "without public scrutiny" would be the wave of the future if federal health care reform were repealed.


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