Blue Shield Cancels Rate Hikes

March 17, 2011

Blue Shield of California announced earlier this week that it has canceled health insurance premium increases that averaged 6.5 percent and went as high as 18 percent.

The increase would have affected almost 200,000 Blue Shield customers, and would have been the insurer’s third such increase in recent months. The decision to cancel this increase was influenced by pressure from California state officials, and by opposition from policyholders, the Los Angeles Times said, yesterday.

Insurance industry analysts don’t believe this rate increase cancellation will cause much financial impact to Blue Shield, since it’s been paying out less money in medical claims than it anticipated when building the year’s budget. In fact, medical spending has been lower than expected lately for WellPoint, Inc., and Aetna as well as Blue Shield – saving all three companies millions of dollars, although officials at those companies say that it’s not because people are healthier, but rather that more people are choosing not to have health insurance.

As WellPoint spokesperson Kristin Binns said, “In times of recession, you see people choosing to forgo elective procedures because of their budgets.”

Some analysts say that if people continue to base their medical decision on economics, it could slow the rise of health care costs.

“This is a win-win potentially for both health insurers and the insured,” said Gavin Magor of Weiss Ratings in Jupiter, Fla. His company reported that hundreds of insurers across the nation saw no rise in benefits payouts last year.

However, other analysts warn that this trend also comes with the risk that people will skip vital care.

Explains Shana Alex Lavarreda of the UCLA Center for Health Policy Research, “When you put preventive services off, you put off appropriate care that may have helped save you from having a more costly condition.”