STUDY ORDERED BY BLUE SHIELD IS MET WITH CRITICISM

A Blue Shield-commissioned study justifying sizable increases in individual insurance rates was released Tuesday to sharp criticism from the state's insurance commissioner and consumer advocates.

The study by actuary David Axene concluded that the planned rate hikes affecting some 200,000 Californians are "reasonable, not excessive" and meet state rules and a federal requirement that 80 percent of premiums be spent on medical expenses.

Axene is the actuary who last year found errors in insurers' rate filings submitted to the Department of Insurance, which led to the hikes being rescinded.

Insurance Commissioner Dave Jones said in a prepared statement he had "serious concerns" about Blue Shield's rate filing after his initial review of the study released Tuesday.

"Our preliminary review of the report on Blue Shield's most recent rate filing indicates the insurer has failed to provide all the information we requested and this has led to serious concerns about their filing," Jones said.

Jones in February called for a 60-day delay from Blue Shield and other insurers in imposing hikes so his office could review the rates for state and federal compliance. The departmental report has not yet been filed.

After first refusing, Blue Shield agreed to the delay and launched its own review under Axene's guidance.

Consumer advocate Doug Heller, executive director of Consumer Watchdog, was not buying the conclusions of Blue Shield's report Tuesday.

"It turns out Blue Shield knows how to do math, but that doesn't mean that it's appropriate, reasonable or acceptable," he said. "It means more Californians will be forced out of the insurance market, and that's bad for everybody."

The study suggested that Blue Shield's individual rate customers should prepare for more increases.

"Until there is a significant change in our health care system and how it works, the unfortunate outcome is higher than desired health care costs (and) higher than desired or expected rate increases," the study read.

For Blue Shield customers who buy their own insurance, the rate hikes will be the third since October, amounting to up to 59 percent in some cases. Blue Shield officials stood by the study and its expert and said it plans to implement the rate hikes May 1, the end of the 60-day delay.

"The report speaks for itself," said Blue Shield spokesman Johnny Wong. "We proactively engaged for an independent actuary review, and the outcome is what you see today."

Not-for-profit Blue Shield said it stands to lose as much as $30 million in 2011 by providing individual coverage and said it needs the rate hikes to pay its members' medical expenses and defray rising health care costs.

Contact The Bee's Darrell Smith, (916) 321-1040 or [email protected]