Blue Shield Urged to Hold Off on Rate Increases

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State health regulators called on Blue Shield of California on Thursday to hold off raising its health insurance premiums for 60 days to thousands of individual policyholders, some of whom were hit with hikes as high as 59 percent.

Blue Shield has raised rates for many of its members to levels that have drawn the ire of state and federal lawmakers. The controversy mirrored a furor raised last year when Anthem Blue Cross issued rate hikes of 39 percent, reigniting debate over the national health care law. Under pressure, Anthem eventually agreed to adjust its rates on individual policyholders to an average increase of about 14 percent.

Blue Shield, a nonprofit insurer based in San Francisco, publicly supported the federal health overhaul but has blamed its increases on rising medical costs, increased use of services and to a smaller degree on the federal law as well as state reforms that went into effect Jan. 1. The increases began going into effect on Oct. 1.

Company spokesman Johnny Wong said the increases, averaging 30 percent, affect 193,000 individual policyholders. "Despite these increases, which we are loath to do, we're not making any money," he said, referring to the individual market.

Insurance Commissioner Dave Jones, who took on his new position Monday, said he asked Blue Shield to delay all proposed rate increases to give him time to review the company's filings.

But Jones acknowledged that he has no authority to stop the increases. He is limited to making sure insurers comply with the federal reform by spending at least 80 percent of premium dollars on medical expenses.

"I think this is business as usual in the state of California," said Jones, who as an assemblyman proposed unsuccessful legislation to give the insurance commissioner power to reject rate increases. "We've seen 10, 20, 30, 40, 50 percent increases year over year and it underscores why I need the authority to be able to reject excessive premium increases."

The Chronicle reported last month that Blue Shield informed some of its individual policyholders that their premiums will go up in the low single digits because of the federal law, plus an additional 18 percent to account for a new state law that will prohibit insurers from charging women more for insurance than men.

Some Blue Shield members have since said the company has told them they face rate hikes in excess of 50 percent effective March 1. Whether the steep hikes were cumulative over several months was unclear in some cases.

But San Francisco resident Derek Mendez, 37, said the 57.4 percent increase that Blue Shield has told him he will have to pay as of March 1 comes on top of a nearly 14 percent increase effective Jan. 1. He said he realizes his monthly payment of $129 with the increases is relatively low, but he has experienced a 92.5 percent increase since March 2009.

"I'm just hopeful either Blue Shield will come to their senses or enough pressure is put on them that they'll back down," said Mendez, who did not go to a doctor last year.

Assemblyman Mike Feuer, D-Los Angeles, picking up where Jones left off, has introduced legislation that would require health insurers to receive approval from the state before raising premiums. Health insurers oppose rate regulation, arguing it does nothing to curb the increase in medical costs, which they say is the main cause for the hikes.

Doug Heller, executive director of Consumer Watchdog, was hopeful about the possibility of increased regulatory powers. "It's a new day and perhaps a new chance for this kind of consumer protection," he said.

E-mail Victoria Colliver at [email protected].

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