Two California Blues insurers are backing off planned rate increases for individual policyholders. Anthem Blue Cross of California said last week that it would reduce a planned premium rate increase to 9.1% from 16.4%, and delay its effective date from April 1 to July 1. The week before that, Blue Shield of California withdrew a premium rate increase for its 340,000 individual policyholders and said it won't raise rates for the rest of the year.
Regional News/West: Blues back down
California insurers to reduce rate increases
Anthem Blue Cross, a subsidiary of WellPoint, Indianapolis, also will delay hikes on copayments and deductibles planned for April 1 until Jan. 1, 2012, according to the California Department of Insurance. The delays and reductions will save policyholders at least $40 million. Anthem Blue Cross has 600,000 members with individual and family plans in the state. California Insurance Commissioner Dave Jones had asked major insurers to delay planned rate increases for 60 days when he took office in January, so he could review all recent rate filings. After review, the agency determined that Anthem Blue Cross's planned average increase of 9.8% for April really totaled 16.4%, because of increases in out-of-pocket costs and a rate hike tacked on because of the agreement with the state to delay implementation, according to Jones. “In our review of the rate filing, we also reached different conclusions about the trend of medical prices, utilization and membership than Anthem had reached in its rate filing,” Jones said in a news release. “Based on this analysis and the impact of an over-16% increase in rates on Anthem Blue Cross policy-holders, I asked Anthem Blue Cross to reconsider its rate increase.” San Francisco-based not-for-profit Blue Shield also has been under scrutiny over the rate hike since Jones asked for a delay of a planned March rate increase for 60 days. Blue Shield then conducted an independent actuarial review that found the rate hikes to be appropriate. The March rate hike averaged 6.5% and was up to 18% for members. Blue Shield raised rates last October and again in January. The cumulative past rate hikes plus planned increases for this year would have totaled as much as 87% for some members. Blue Shield said it lost $27 million on individual coverage in 2010, and with the withdrawn rate hikes, it expects additional losses this year. Meanwhile, policyholders are expected to save between $35 million and $40 million in premium costs with the rate freeze, the company said. “By agreeing not to raise rates this year, we are helping to make coverage more affordable for our members during tough economic times,” Blue Shield of California Chairman and CEO Bruce Bodaken said in a statement. “It's a financial risk for us, but a risk that's worth taking.”
Send us a letter
Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.