Rate hikes are reasonable, says Blue Shield of California

Blue Shield of California has determined that, despite strong opposition and criticism from state regulators and consumers, its proposed rate increases are reasonable.

After reviewing Blue Shield's paperwork, the independent actuary firm Axene Health Partners concluded that the pending rate hikes for almost 200,000 individual policyholders--averaging 6.5 percent and reaching as high as 18 percent--are not excessive in light of fast-rising healthcare costs, reports the Los Angeles Times.

"It is our opinion that the [California Blue Shield] proposed rates are reasonable, not excessive, and meet the requirements of the California Department of Insurance," Axene wrote in a letter, according to National Underwriter. "It is our opinion that these rates will generate a small positive margin ... when investment income is included and as the new commission schedule comes into full effect."

The study also suggested Blue Shield's individual rate customers should prepare for more increases, reports the Sacramento Bee. "Until there is a significant change in our healthcare system and how it works, the unfortunate outcome is higher than desired healthcare costs (and) higher than desired or expected rate increases," the study read.

Blue Shield raised rates in October for individual policyholders, followed that with a second increase in January and then scheduled a third hike for March, until it was postponed at the insurance commissioner's request. The rate increases currently are on hold for 60 days while state regulators examine them.

California Insurance Commissioner Dave Jones was skeptical of the report, saying Blue Shield has yet to fully answer questions he raised about the filing. "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. "We will continue to review it thoroughly."

To learn more:
- read the Los Angeles Times story
- see the National Underwriter article
- check out the Sacramento Bee piece

Related Articles:
Blue Shield of California wants 59 percent rate hike; State wants a delay 
Blue Shield of California defies request to delay rate hike 
Three insurers delay rate hikes; Blue Shield still won't wait 
Blue Shield to delay rate hike after public pressure