Santa Monica — In response to the news that Blue Shield is delaying its cancellation of policies for 90 days, following a demand by the Department of Insurance, Consumer Watchdog called on all other health insurance companies in California who cancelled approximately 900,000 policies this month to follow suit.
Consumer Watchdog also asked Covered California, which has contracts with the insurers, to support the reprieve for beleaguered policyholders.
“If Blue Shield policyholders are getting 90 days more to shop for new policies, why shouldn't all policyholders?” said Jamie Court, President of Consumer Watchdog and author of a ballot measure to regulate health insurance rates in the state. “Most policyholders are getting steep premium hikes and it’s only fair given the exchange’s computer glitches and slow enrollment process to give consumers more time to find policies that are more affordable and include their own doctors.“
Blue Shield and other insurance companies are steering people in cancellation letters to higher priced policies, potentially without subsidies that policyholders may be entitled to. Consumer Watchdog said it is critical that consumers have more time to make more informed choices.
Two-thirds of cancelled Blue Shield policyholders are reportedly getting rate hikes. Consumer Watchdog said this dramatizes the need for rate regulation in the state that Californians will cast their vote about on November 4, 2014. If rates insurance companies charge cancelled policyholders are too high, and the initiative passes, the ballot measure empowers the insurance commissioner to issue refunds.
“The health insurance companies claim Obamacare is to blame for these rate hikes, but in fact it’s their profit motive,” said Court. “Without rate regulation, health insurers can raise rates at will and without justification. But health insurance companies will have their day of reckoning if voters take matters into their own hands at the ballot one year from today."
State regulators have repeatedly found Blue Shield rate increases to be unreasonable, as recently as last month for rates proposed for cancelled policyholders, yet currently no one in the state has the power to stop them. The Insurance Rate Public Justification and Accountability Act requires all health insurance companies to open their books and publicly justify rate increases, and gives the Insurance Commissioner the power to reject rate increases that are excessive.
Download samples of policy cancellation letters from Blue Shield: http://consumerwatchdog.org/sites/default/files/resources/blue_shield_cancellation_letter.pdf
And Blue Cross: http://consumerwatchdog.org//sites/default/files/resources/blue_cross_cancellation_letter.pdf