Array

Blue Shield Cancels Major Rate Increase After Intense Public Scrutiny But New Laws Are Needed, Consumer Watchdog Says

Published on

Santa Monica, CA — Consumer Watchdog praised the public pressure campaign led by California Insurance Commissioner Dave Jones that forced Blue Shield of California to freeze rates for one year, canceling the outrageous rate hike that would have raised some policyholders' premiums as much as 86.5 percent.

Last month, Consumer Watchdog, the California Nurses Association, and Blue Shield patients protested at Blue Shield’s headquarters and that day the company agreed to delay the hike for two months. Today Blue Shield said it would cancel all rate hikes until January 2012.

Consumer Watchdog said Blue Shield acted in hopes of avoiding Assembly Bill 52 (Feuer), which would give the insurance commissioner power to reject excessive health insurance premium hikes. Currently the commissioner only has that power over auto, home, and other property-casualty insurance rates.  Those protections were put in place in 1988 by voter-approved Proposition 103, authored by Consumer Watchdog founder Harvey Rosenfield.

“Blue Shield is trying to vent the steam of public pressure that has built up in the wake of massive rate hikes and hoping to quiet the call for real oversight and regulation," said Doug Heller, Executive Director of Consumer Watchdog. “We shouldn’t have to march in the streets in front of Blue Shield’s headquarters in order to stop excessive rates. We need the insurance commissioner to have the power to check these companies every day.”

Consumer Watchdog noted that Blue Shield has not agreed to rescind prior rate hikes that took effect last year and that several other insurers, including Anthem Blue Cross and Aetna still plan to impose rate hikes this spring.  Under current California law, the insurance commissioner cannot prohibit any of those hikes from taking effect, even if they are determined to be excessive and unnecessary.  

“The fact that Blue Shield adamantly insisted these hikes were necessary and suddenly decided to withdraw them, just proves that insurance companies will try to get as much money as they can from policyholders as long as no one has the power to stop them,” said Heller.  

The proposed reform legislation, AB 52, would require insurance companies to get permission before implementing any hike and would allow the insurance commissioner to deny or modify rate changes determined to be excessive.  The bill would enact rules similar to Proposition 103, which requires the Insurance Commissioner to regulate auto insurance rates.  Under those rules California motorists have saved more than $62 billion on their auto coverage over the past two decades, according to a 2008 report by the Consumer Federation of America.

– 30 –

Consumer Watchdog is a nonprofit, nonpartisan organization with offices in California and Washington, D.C.  http://www.ConsumerWatchdog.org

Latest Videos

Latest Articles

In The News

Latest Report

Subscribe to our newsletter

To be updated with all the latest news, press releases and special reports.

More articles