California Insurance Commissioner Asks Blue Shield to Delay Rate Increase

January 6, 2011

California Insurance Commissioner Dave Jones has asked Blue Shield of California to hold off on its next round of substantial premium increases that would affect tens of thousands of individual health insurance policyholders in the Golden State. Once that rate increase goes through, some of those customers could see health insurance rates increase up as much as 59%, the state Department of Insurance said.

Blue Shield is seeking rate increases that would result in a cumulative increase that would average more than 30% over a five-month span for roughly 200,000 policyholders, according to reports distributed by the Associate Press. The next increase is to go into effect on March 1st of this year, assuming California regulators approve it, to follow other increases that went into effect on October 1, 2010 and January 1st, according to a report in the Los Angeles Times.

If the newest rate hike is approved, roughly 195,000 Blue Shield customers would see their premiums go up an average of 30-35%.

In a statement to the press, Commissioner Jones said, “I find it stunning that Blue Shield would seek to impose such massive premium increases on policyholders during these troubling economic times. These premium increases will impose significant financial burdens on struggling families and, in some cases, will lead to the loss of health care coverage altogether.”

Jones also sent a letter calling on the insurer to delay their rate increase for at least sixty days beyond the proposed March 1 effective date. Under current California law, the Insurance Commissioner cannot reject excessive premium increases outright, but by asking for a delay from Blue Shield, he hopes to ensure that all proposed increases have been thoroughly reviewed.

Blue Shield points to the rising cost of health care as the impetus for increasing their rates. “We raise rates only when absolutely necessary to pay the accelerating cost of medical care for our members,” the company told customers last month.