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Blue Shield of Calif. cancels proposed rate hike

- Associated Press - Wednesday, March 16, 2011

SAN FRANCISCO (AP) - Blue Shield of California said Wednesday it was withdrawing its plan to increase health insurance rates for individual policyholders in what would have been the third such rate hike since October.

The three hikes combined would have raised rates by as much as 87 percent for some of its 200,000 policyholders, according to the California Department of Insurance.

Blue Shield decided to nix the planned May 1 increase to help keep coverage affordable, chief executive Bruce Bodaken said in a statement.

Blue Shield has said rising health care costs forced the previous rate hikes. The San Francisco-based nonprofit said it lost $27 million on individual policies last year and expects more such losses this year.

Members will be spared a total $35 million to $40 million in added premiums because of the cancelled increase, the insurer said.

"By agreeing not to raise rates this year, we are helping to make coverage more affordable for our members during tough economic times," Bodaken said. "It's a financial risk for us, but a risk that's worth taking."

The insurer said individual policyholders would not see any more rate hikes for the rest of the year.

In a conference call with reporters, California Insurance Commissioner Dave Jones said the Blue Shield decision highlighted the need to give the commissioner the power to reject health insurance rate increases.

Under state law, a regulator cannot reject premium increases for health insurance. But Blue Shield last month pushed back its planned March 1 implementation of the rate hike at the request of Jones, who had said he planned to review the increases for compliance with federal and state laws.

Three other insurers _ Aetna, Anthem Blue Cross and PacifiCare _ had already agreed to a similar delay.

"My hope is the other insurers will note what Blue Shield has done and act accordingly," Jones said Wednesday.

Consumer advocates harshly critical of Blue Shield's increases said they were pleased by the cancellation of the plan but said it wasn't enough.

"We won't stop until our goal of giving an elected insurance commissioner the power to reject premium increases is the law," Consumer Watchdog president Jamie Court wrote in an e-mail.

A bill sponsored by Democratic Assemblyman Mike Feuer of Los Angeles that would give that power to the commissioner is currently before the Legislature. Similar bills have failed in recent years.

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