Blue Shield of California Seeks Rate Hikes of as Much as 59% for Individuals

Let me first say that I love California.  My family has lived here for more than 3 generations.  But a 59% increase for individual premiums?  Really?  It is already hard enough to get coverage in California.  I think we’re one of the worst states when it comes to excluding pre-existing conditions, which leads me to believe that forcing insurance companies to offer coverage to everyone for everything has come back to bite our state in the butt first.  Even if you don’t live in California, you may want to read this, then read your policy and see if you have any annual price lock guarantees.  The 59% hike was done in 3 stages, so it was those with the annual policy that got broadsided by a sudden jump.

By Duke Helfand, Los Angeles Times

Another big California health insurer has stunned individual policyholders with huge rate increases — this time it’s Blue Shield of California seeking cumulative hikes of as much as 59% for tens of thousands of customers March 1.

Blue Shield’s action comes less than a year after Anthem Blue Cross tried and failed to raise rates as much as 39% for about 700,000 California customers.

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.

While most policyholders received separate notices for the successive rate hikes, others were given the news all at once because they had contracts guaranteeing their rate for a year, Blue Shield spokesman Tom Epstein said.

Michael Fraser, a Blue Shield policyholder from San Diego, learned recently that his monthly bill would climb 59%, to $431 from $271.

“When I tell people, their jaws drop and their eyes bug out,” said Fraser, 53, a freelance advertising writer. “The amount is stunning.”

Like many people who hold individual policies, Fraser is self-employed. Others who carry such insurance include people who aren’t covered by employer plans or who have been laid off.

The Blue Shield increases triggered complaints to new Insurance Commissioner Dave Jones, and they could prove to be an early test of how the former Democratic state assemblyman deals with rate hikes and the insurance industry.

Anthem’s attempt to raise rates by up to 39% led to national outrage and helped President Obama marshal support for his healthcare overhaul. The insurer was ultimately forced to back down, accepting maximum rate hikes of 20%.

Jones said the Blue Shield move underscored the need for the Legislature to give the insurance commissioner legal authority to regulate insurance rates the same way he does automobile coverage.

At present, the commissioner can block increases only if insurers spend less than 70% of premium income on claims. Jones’ office said Blue Shield’s March 1 increase was under review.

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