3 Health Insurers Agree to California Commissioner’s Request to Delay Rate Hikes

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Hundreds of thousands of Californians won at least a temporary reprieve from escalating health premiums Thursday when three of the state's largest insurers agreed to delay rate hikes.

But the company that launched the latest round of headlines about escalating rates, Blue Shield, stood by its decision to go forward with a March 1 increase that will raise rates on nearly 200,000 individual policyholders, some by as much as 59 percent.

Aetna, Anthem Blue Cross and PacifiCare said they would delay previously announced rate increases for at least 60 days.

Insurance Commissioner Dave Jones, who requested the delays just days after being sworn in Jan. 3, said he wanted time to review the companies' rate filings.

"I continue to be disappointed by Blue Shield's response," Jones said Thursday.

Blue Shield subscribers have been particularly miffed by the latest increase – the third since last fall. But the company said the rate increases were  necessary to keep up with rising hospital bills and prescription costs. The increases affect those who buy insurance on their own rather than receiving it through an employer.

As Congress continues to argue over the future of the country's health care system – and a possible curtailment, if not repeal, of the federal health care law – supporters of the law have seized on rising rates as a reason it should remain in place.

"Here in California, we've been suffering double-digit insurance rate hikes for years," said Jones, who again lamented his lack of authority to reject "excessive" rate hikes.

Jones is to join Kathleen Sebelius, secretary of the federal Department of Health and Human Services, in a telephone conference today to tout the benefits of the Patient Protection Act, the fledgling law signed last spring by President Barack Obama.

The federal law has come under attack by congressional Republicans who say the $1 trillion program is too expensive and a job killer, and does more harm than good in changing the health care system.

Rates for individual health insurance policies have been mercurial in recent years, with some carriers, including Blue Shield, raising rates with greater frequency than others.

A chorus of consumer advocates, including Jones, have sought to give the state's insurance commissioner the authority to reject rate increases.

"This highlights what's wrong with our health insurance system, when we have to rely on the good will of insurance companies to allow the time to have the insurance commissioner review their rate hikes," said Doug Heller, the executive director of Consumer Watchdog.

The insurance commissioner can reject rates only if an insurer spends less than 70 cents of every premium dollar on medical care, although Jones said he now has the authority to enforce the federal standard of 80 cents.

Despite Jones' lack of authority, the rate reviews he plans to conduct are far from an academic exercise. Last year, Anthem Blue Cross and Aetna retreated from plans to raise rates after an Insurance Department review found mathematical errors in their calculations.

The mistakes were especially embarrassing for Anthem because of the company's steadfast defense of its rate hike – an increase of as much as 39 percent on some customers – during hearings convened by elected officials in Sacramento and Capitol Hill.

On Thursday, Anthem said it was honoring the commissioner's request to delay its rate increase, averaging 9.8 percent, that was to go into effect April 1 for more than 600,000 Californians who buy policies in the individual market.

Anthem spokeswoman Peggy Hinz said her company is "committed to working with Commissioner Jones and his staff in a cooperative manner."

Anthem will delay the rate hike until at least June 1, as will Aetna, which previously announced an increase of 2.8 percent on average.

PacifiCare, which notified the state that it would raise rates on its customers anywhere between 2.5 percent and 9.1 percent, will delay the increases until April 1, the company said.

While Blue Shield declined to delay its rate increase, it said it had hired an outside actuary to review its rate filings.

"If the independent review finds that the rates are not sound, we will hold our members harmless by refunding the difference with interest," the company said in a statement.

Even with the planned rate hike – which will average 15 percent – the company says it expects to lose between $20 million and $30 million this year on its individual policies.

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