Blue Shield of Calif. to proceed with rate hikes

[January 15, 2011]  SAN FRANCISCO (AP) -- Blue Shield of California said Friday it was planning to go forward with scheduled health insurance rate increases for individual policyholders, despite calls from government regulators to delay the move.

The San Francisco-based insurer said that it has asked an independent actuary to review the increases and would issue refunds if problems were found with the rates.

California Insurance Commissioner Dave Jones had asked Blue Shield to delay planned increases on March 1 so his department could conduct a full review.

The insurer has implemented two rate hikes since Oct. 1. Some policyholders would pay 59 percent more in premiums cumulatively over the three increases.

Blue Shield CEO Bruce Bodaken said the increases were necessary because of rising health care costs.

"Our premiums are rising because of the rapid increase in health care expenses for our members," Bodaken said. "Reducing medical costs must be an urgent national priority for health coverage to be affordable for the vast majority of Americans."

In a statement, Blue Shield called its pledge to abide by the actuary's conclusions "unprecedented." Jones said the insurer was required by a state law that took effect at the beginning of the year to retain an independent actuary to evaluate any rate increase.

That law also required the insurance commissioner to review the reasonableness of rate hikes, but did not give him the authority to reject the increases.

"I do not have that authority now. I have been fighting to get that authority," Jones said.

Jones called the Blue Shield hikes unsustainable at a time when many Californians are struggling financially.

Blue Shield said it had hired David Axene as the actuary who would review its rates. Axene last year uncovered errors in rate increases proposed by Anthem Blue Cross that had come under fire from President Barack Obama during the debate over his health care reform bill.

The discovery lead Anthem to reduce its increases to an average of 14 percent from proposed rate hikes as high as 39 percent.

[Associated Press; By MARCUS WOHLSEN]

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