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California insurance commissioner to Blue Shield: Delay rate hike

January 6, 2011 |  2:25 pm

California’s new insurance commissioner called Thursday for health insurer Blue Shield of California to delay controversial new rate hikes for 60 days, saying recent increases by the industry were alarming.

On the job since Monday, Commissioner Dave Jones said he wants to take a closer look at the Blue Shield increases planned for nearly 200,000 individual policyholders, whose rates would rise for the third time since October -- some as much as 59% total.

Jones “I believe the premium increases are unsustainable,” Jones said in a meeting with The Times, referring to successive rate hikes in recent years by Blue Shield and its competitors in California. “I think we need to scrutinize everybody.”

As Jones urged Blue Shield to act immediately, news of its rate increases drew sharp criticism from consumer groups, members of Congress and the Obama administration.

Health and Human Services Secretary Kathleen Sebelius seized on the issue as congressional Republicans sought to repeal the Obama administration’s healthcare overhaul.

“The people of California have a right to be concerned when they see this kind of rate increase month after month,” Sebelius said in a statement. “We have reached out to Commissioner Jones and know he is doing everything in his power to help consumers. We stand ready to assist him and the people of California in any way that we can.”

The San Francisco-based insurer did not respond immediately to Jones’ call for delay. But in a statement earlier Thursday, the insurer said that the three rate increases -- Oct. 1, Jan. 1 and March 1 -- cover a period of more than a year and have little to do with the new federal healthcare reforms.

“These rates reflect trends that were building long before health reform,” the company said. “Our individual-market medical costs are rising rapidly due to higher provider prices, increased utilization, and the fact that healthier people are dropping coverage during a bad economy.”

Blue Shield said that even with the rate hikes, it expects to lose “tens of millions of dollars on its individual healthcare business in both 2010 and 2011.”

The company added that its rates meet a new federal healthcare requirement for insurers to spend at least 80% of premiums on healthcare expenses.

-- Duke Helfand

Photo: Insurance Commissioner Dave Jones

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