Santa Monica, CA — Consumer Watchdog, in a letter to Governor Jerry Brown, warned that in less than a month more than 150,000 Californians will face a major Anthem Blue Cross rate hike and increased deductibles, despite a flurry of reports last month that there would be a reprieve. The 150,000 Californians scheduled to receive a May 1 premium increase of up to 26% are enrolled in Blue Cross policies overseen by the Department of Managed Health Care, while customers with policies regulated by the California Department of Insurance will face smaller increases, which have been delayed until July.
Download the letter to Governor Brown here:
In the letter Consumer Watchdog wrote:
“The confusion – and ensuing consumer anger that is percolating – stems from the fact that Insurance Commissioner Dave Jones’s success in reducing and delaying the Blue Cross rate hike and deductible change only applies to the Californians who happen to have Blue Cross PPO plans regulated by the Department of Insurance. Those PPO policyholders with policies overseen by the Department of Managed Health Care are out of luck.
"Instead, the unfortunate DMHC policyholders are facing nearly 17 % rate hikes on May 1, as well as sudden increases in their deductibles, on top of the 20% increase imposed by Blue Cross last autumn. We have heard from numerous families who felt some relief when they learned that Commissioner Jones had delayed Blue Cross’ hike and that the company agreed to reduce it to a still burdensome 9.1% increase, only to find that their policies didn’t have the right regulator and the increases would be imposed as originally planned. Their anger is palpable and their fear that they are on the verge of having to forego health insurance is real.
"Californians whose insurance policies are regulated by the DMHC should not be treated as second-class citizens.”
In the letter, Consumer Watchdog calls for:
* Blue Cross to stop applying different pricing standards to Californians based on which regulator happens to oversee their policy.
* Support of AB 52 (Feuer – Los Angeles), which will require regulators to prohibit insurers and health plans from imposing increases that are excessive.
* A plan to merge all insurance rate regulation functions into the Department of Insurance.
Janet Stephens, of Anaheim, California, recently learned that she was one of the 150,000 unlucky Californians under DMHC regulation subject to the severe May 1 rate increase. "I feel like Blue Cross Cross has a gun to my head — either I pay their outrageous rates, or I lose my insurance. I can't afford to go without health insurance," Stephens said.
Currently, California law does not allow any regulator to block excessive rate hikes imposed by health insurance companies. Legislation – AB 52 (Feuer) – has been introduced to give regulators the power to reject excessive health insurance premium hikes and allow consumers to challenge rate increases as well. Blue Cross’s voluntary decision last month to delay and partially reduce some policyholders’ rate hikes after pressure from Insurance Commissioner Jones, and the insurer’s refusal to pull back on the severe rate hikes for other customers highlights the need for systematic and consistent oversight of insurance companies as proposed in AB 52.
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 and other property/casualty 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.
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Consumer Watchdog is a non-partisan public interest organization with offices in Santa Monica, CA and Washington, D.C. For more information, visit is on the web at http://www.ConsumerWatchdog.org