Blue Shield submits to rate hike delay in Calif.
Blue Shield of California has joined other health insurers in delaying implementation of new rate hikes for individual policyholders, after initially declining to do so despite a request from the state's new insurance commissioner.
In a statement Tuesday, the San Francisco-based insurer announced it would delay a March 1 rate hike for 60 days. The premium increase is Blue Shield's third rate hike for some policyholders since Oct. 1.
"I am pleased that Blue Shield is now joining Aetna, Anthem Blue Cross and PacifiCare in agreeing to my request for an additional 60 days to review their rate filings," Insurance Commissioner Dave Jones said in a statement. The three other insurers agreed to delay their rate hikes last week.
Blue Shield's three increases would boost premiums an average 30 percent for the 200,000 customers who buy individual policies. Some of its customers would pay 59 percent more in premiums, cumulatively, after the three increases.
In a release two weeks ago, Blue Shield rejected Jones' request for a delay, saying it would hire its own actuary to review the hikes and provide refunds if necessary.
In California, a regulator cannot reject premium increases for health insurance. But Jones said he will review the increases for compliance with federal and state laws.
The insurer declined to give a specific response Tuesday to questions about why it decided to acquiesce to the state regulator.
"We are taking this action to remove any doubt that the rates we have submitted are necessary to pay the medical expenses of our individual members and meet the new medical loss ratio standard," Blue Shield chairman and CEO Bruce Bodaken said in a statement.
A medical loss ratio is the proportion of policy premiums that must be spent on medical care, as opposed to overhead, administrative costs and profits. Under federal health care reform, insurers are mandated to spend 80 percent of premiums on medical care. That percentage has been 70 percent in California, but Jones recently gained power under emergency regulation to ask insurers to comply with the tighter federal standard.
Aetna and Anthem Blue Cross each had submitted rate increases, beginning Jan. 1 and April 1 respectively, but both agreed to delay 60 days from those dates. PacifiCare's planned Jan. 1 increase will be delayed until April 1.