The
healthcare insurer says the move comes after ‘a lot of feedback’ from
customers concerned that the company was taking away a key benefit
during hard times.

Blue Shield of California said today that it’s dropping plans to reduce the
grace period customers are given to pay missed bills before their
health coverage is terminated.

The decision came after I reported Wednesday that numerous individual policyholders had been informed that Blue Shield was going to take away a key benefit
even as millions of people grapple with the loss of jobs and homes and
as lawmakers debate making the healthcare system more accessible.

A number of news outlets picked up the story, prompting more customers
to contact the company with questions about why Blue Shield was playing
rough.

"We were getting a lot of letters, a lot of people calling in," said Blue Shield spokesman Aron Ezra. "We got a lot of feedback.

"The company is always trying to listen to members," he said. "People
are happy about some things we do. They weren’t happy about this."

Apparently someone at the company figured out that taking away a
healthcare benefit in the middle of the holiday season and during the
worst economic downturn since the Great Depression maybe isn’t the
smartest move PR-wise.

As I reported, Blue Shield recently sent a letter to individual
policyholders statewide informing them that the company "will no longer
reinstate policies that are canceled for nonpayment of premiums."

"This means if your premiums are not paid in full and received by the
due date, your policy will be canceled and you will need to re-apply
for coverage."

What Blue Shield neglected to mention was that state law requires
that a grace period be provided. In the case of the policies in
question, customers must be given at least 10 days to make up any
missed payments before their coverage can be canceled.

What Blue Shield also neglected to mention was that the company would in fact continue providing a 28-days’ grace period.

What it was changing was a contract provision allowing an extra 15 days
twice a year, giving customers up to 43 days to cover missed payments
without facing any penalties.

When I asked earlier this week why the company was changing its
contract at this particular time, I was told that only that Blue Shield
wanted to make things uniform.

But calls and e-mails I received from Blue Shield customers made clear
that they believed the company was deliberately being a Grinch this
holiday season, taking away a benefit that was more generous than what
many other insurers provide.

Agoura Hills resident Ray Rubio told me today that he was shocked and angered by Blue Shield’s letter.

"Although I can’t prove it, it almost felt as if the insurance industry
— i.e. Blue Shield — had decided that they were going to purge their
individual subscribers with this lame ‘if your payment is late, your
policy will be canceled and you will need to re-apply’ policy," he said.

Apparently Blue Shield got the message. The company posted a statement
on its website saying that "in light of the feedback we have received
from our members about this issue, we are going to maintain our
existing policy — nothing is changing."

"We will continue to allow canceled members to ask to be reinstated for
an additional 15 days after the 28-day grace period. We will grant such
reinstatements up to twice a year."

Jerry Flanagan, who oversees healthcare issues for Consumer Watchdog, a
Santa Monica advocacy group, said he wasn’t surprised that Blue Shield
blinked after its proposed contract change was publicized.

"The publicity exposed Blue Shield as being just like all the other
insurance companies, which is not how they want to be seen," he said.

For this week at least, Blue Shield gets to set aside its Grinch mask
and put on a Santa hat. But is there a chance the company will revisit
this contract change after the holidays?

Ezra, the company spokesman, said no.

"People can go to sleep knowing that the policy isn’t going to change," he said.

We’ll see about that.

David Lazarus’ column runs Wednesdays and Sundays and occasionally in between. Send your tips or feedback to [email protected].