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Blue Shield of California defies request to delay rate hike

A confrontation is brewing in California between the state's insurance commissioner and Blue Shield of California over proposed premium rate increases. Despite Insurance Commissioner Dave Jones' request that Blue Shield delay its rate hike for 60 days so his office could review the proposal, the insurer said it is moving forward with plans to raise rates by as much as 59 percent.

Blue Shield "believes the rates are appropriate," company spokesman Johnny Wong told the Sacramento Bee. As a result, "We are moving forward with the March 1 rate increase."

However, Blue Shield did say it would submit its rates to David Axene, an independent actuary, for review to confirm that calculations are "accurate and its assumptions are sound." Axene will also review the rates for compliance with the new standard under the federal health reform law to see if the new premiums are "excessive, unjustified, or unfairly discriminatory." Blue Shield expects Axene to complete the review within 45 days and will refund overpayments, with interest, if the actuary "finds that the rates are not sound," the Sacramento Bee reports.

The decision to hire the actuary could have implications for Aetna, UnitedHealth and WellPoint, whose rate increases also are under scrutiny by the California insurance commissioner, according to the Wall Street Journal. Aetna said it was in discussions with the commissioner's office regarding Jones's request for delay, while WellPoint declined to comment. UnitedHealth said it hadn't received Jones's request, according to the Wall Street Journal.

Jones discounted Blue Shield's hiring of the actuary as "unprecedented," noting that a new state law requires insurers to obtain independent actuarial reviews of their rate filings, notes the Los Angeles Times. "I'm not sure Blue Shield is well served, and I'm not sure Blue Shield's policyholders are well served, by their decision not to delay their rate increase," Jones said. "I'm disappointed they didn't comply. I think it was a reasonable request."

To learn more:
- read the Sacramento Bee article
- view the Wall Street Journal story on the delay and other insurers' response
- see the Los Angeles Times piece

Related Articles:
Blue Shield of California wants 59 percent rate hike; State wants a delay
Aetna, Anthem, PacifiCare asked to delay rate hikes
It's time for that Blue Shield of California membership meeting

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Comments (2) | Post a comment


Over the last 5 years, statistics show that insurance company profits have quadrupled, and premium rates have doubled. You don't have to be a genius to do the math. This rate hike is yet another example of unWellpoints unbridled greed. They should just go for a 100% increase and get it over with. It wouldn't be too surprising and only slightly more ridiculous than what they're up to now. If Congress doesn't grow some cajones and slap this down, we will certainly know for sure that the new electees are bought and paid for by the insurance industry.

Blue Shield should be allowed to do whatever they want. This is still a free market enterprise (although in California, our politicians like to think differently). Let the companies decide on whether they can afford to use Blue Shield in this economy. We walked from Blue Shield last January when they raised our company rates 100%! We insure with United HealthCare. Bye Bye Blue Shield!

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