California Insurance Commissioner Dave Jones has asked Blue Shield of California to delay implementation of planned premium rate hikes for individual policyholders of up to 59% so he can review them.
Calif. official asks Blues to wait on rate hikes
Jones is asking for a 60-day reprieve on all rate increases planned so far this year from the San Francisco-based not-for-profit insurer. Some rate increases went into effect Jan. 1, others are slated for March 1. About 200,000 policyholders will be affected.
“I have not had an opportunity make sure it complies with California's laws,” said Jones, who took office on Jan. 3.
Blue Shield of California said in a statement the rate hikes are not a result of the federal health reform law. “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,” the insurer said in a statement, adding that the company expects to lose tens of millions of dollars on this business this year and next California regulators don't have the authority to reject health insurance rate increases, but they can block insurers from selling policies that don't meet a requirement that they spend 70% of member premium dollars on medical costs.
In addition, on his first day in office, Jones issued an emergency regulation giving him the legal authority to enforce a new federal mandate that is part of the health reform law requiring insurers to spend at least 80% of member premium dollars on medical costs for individual policies. Insures that don't meet this threshold must issue rebates starting in 2012.
Blue Shield of California said in the statement that the planned rate increases meet this new federal requirement.
HHS Secretary Kathleen Sebelius, meanwhile, issued a statement supporting Jones and saying the situation demonstrates the need for new rules that will require insurers to report and explain large premium increases.
“The practice of insurers imposing these kinds of rate increases without public scrutiny would be the wave of the future without the Affordable Care Act," Sebelius said.
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