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California, Federal Officials Vow To Fight Blue Shield Rate Hike

SACRAMENTO (AP) — U.S. Health and Human Services Secretary Kathleen Sebelius and California Insurance Commissioner Dave Jones are vowing to push back against massive health insurance rate hikes proposed by Blue Shield.

Blue Shield has implemented two rate hikes since Oct. 1 and plans another for March 1. Some policyholders would pay 59 percent more in premiums cumulatively over the three increases.

Jones, who has been an insurance regulator for only 72 hours, said in a press conference Thursday that he’s asked the insurer for a 60-day delay in implementing the hike so he can fully review the recent rate increases that Blue Shield has proposed. But he noted his powers are limited.

Blue Shield did not immediately provide a response Thursday.

KCBS’ Betsy Gebhart Reports:

“Many Californians are understandably angry and upset over these rate hikes,” said Jones. “Unfortunately, under California law it’s simply the case that the insurance commissioner does not have ability to simply reject excessive rate increases.”

Jones announced Tuesday he is calling for increased enforcement powers by emergency regulation.

California has a “rate and file” law in which a rate hike proposal goes into effect 30 days after it is filed with the commissioner’s office.

The only way a rate hike can be rejected by the commissioner is if it fails to meet the legal “medical loss ratio” requirement, or the required percentage of premiums that must be dedicated to medical care. Until this year, state regulation required insurers to spend 70 percent of premiums on health care, but federal reform now requires them to spend 80 percent on non-administrative costs.

In a statement, Sebelius said she’s ready to assist California, and that rate increases “without public scrutiny” would be the wave of the future if federal health care reform were repealed.

“The people of California have a right to be concerned when they see this kind of rate increase month after month,” said Sebelius. “We stand ready to assist (Jones) and the people of California in any way that we can.”

Blue Shield’s rate hike announcement comes as a freshman class of Republican congressmen arrives in Washington, vowing to make good on campaign promises to repeal federal health care reform.

Rate hikes have been central to the health care reform debate since President Barack Obama’s final push to pass the bill, when he held up a massive proposed rate increase from Anthem Blue Cross as an example of a broken health care system.

The hike from California’s largest insurer would have cost individual policyholders 25 percent more in premiums on average, with some customers facing 39 percent hikes. Following scrutiny from state-hired actuaries, Anthem’s rate filing was found to have profitable errors, and the hike was reduced to 14 percent on average.

Dave Heller, executive director for Santa Monica-based consumer advocacy group Consumer Watchdog, said the rate hikes are a “shot across the bow” against Democratic leaders, and a signal to new Republican congressmen that the industry is willing to aid their fight to overturn reform.

“This is emblematic of one of the problems we see in the health insurance industry, where they do what’s called death by a thousand cuts for consumers, with an accumulation of rate increases until holding a policy is no longer affordable,” said Heller.

Only about 5 percent of non-elderly Americans have individual insurance policies, a realm that would be regulated for price fairness and quality by state-operated, online marketplaces called health care exchanges, which are to be up and running by 2014.

(© 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

  • What is Working

    I urge Dave Jones to work with Secretary Sebellius to reject this rate hike. if there is any way we the consumers can offer our support for a rejection of this hike and Health care Reform please post a response to my comment.

    We need to take positive action to fight this outrageous behavior. A similar rate hike was tried in Conneticut and their insurance commission rejected it. California needs to put similar safequards in place.

    • GDM

      King Obama should be proud of himself. His actions and that of the Liberals are diectly related to what insurance companies are doing. We can thank BHO for this and theres much more to come unless we turn this guy and his socialist dogs back.

      • Cavendish

        GDM explain How you think “King Obama” and the Liberals are doing this? Explain the direct relationship to me.

  • davey

    The rate will keep going up until the employer stop paying for health benefits. This rate increase will punish the individuals and small businesses.

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  • HBR

    This is beyond sustainable.
    One of the problems that the new health-care bill failed to address was the number of doctors we need in the USA. Currently, it is medical schools (controlled by doctors) and licensing bureaucracies (also, controlled by doctors) the ones that determine how many doctors there are. This produces a conflict of interest of unprecedented proportions since by limiting the number of doctors that go to medical school and get licensed, they can increase their income. No wonder, one day I took my wife because of an abdominal pain I got charged $650 for the doctor that saw her for less than five minutes and I got billed $5200 by the hospital. The bill was that high even though my wife was OK.
    So, the so called health care and insurance systems do one of three things:
    >the will eat you alive little by little if you are faithful to pay for your insurance
    >after many years of paying insurance, the day you get ill and can not longer pay for it, they will say, thank you for your previous payments but since you are not paying any longer, we will drop you.
    >If you don’t pay insurance and you get ill, hospitals will charge you an arm and a leg, price at their discretion (yes $80 for an aspirin, $3000 for a 10 min sonogram). They will charge 2 to 4 times more than they charge insurances. So they may save you from a heart attack, but you will have another when you get the bill.

    This is the result of greed, lobbying that buys favors and laws from politicians.

    Another factor in the cost is malpractice and tort laws that ensure juice work for lawyers. This forces doctors to buy liability insurance, adding even more to the profits of insurances and to the cost we all pay.

    It is a real mess. People are a hostage to the system that lobbyist and big political contributions have bought.

  • rv

    How’s that Hope and Change working for you?

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  • Rt in Danville

    Rate hikes are not new. We’ve seen them for many years (way before the current health care reform). This is a California “State” issue, not a “Federal Govt” issue.

  • motheroftwo

    insurance is out of control and out of reach for a lot of people. But Gov. is not the answer. Whatever Gov. does, they do it in the least effecient way. What we need is to stop the law suits from jacking up health care cost, make shopping for health care as easy and clear as shopping for household products. Set reasonable rates so that people know how much they need to pay for their medical needs instead of letting the surprise cost shock people to death. If we get rid of the lobbyists and regulartors and let private sectors battle it out, we’ll see prices come down.

  • Refer to GDM Above

    This is for Patrick Killelea (the guy in the video, who also runs Patrick.Net): I feel for you man, but refer to the 2nd comment above by GDM. He shines some light on the cause of this. Patrick is under the misunderstanding that “it’s all the Republicans fault.” He has said as much on his website

  • steve

    Everybody who was against the public option and is complaining now, got what he deserves. You shouldn’t complain this is what you asked for.

  • Phil

    Having seen my insurance monthly premium rise from $601 to $1120 in 13 months for my healthy self, wife and 3 yr old, deductable has increased 4 fold in the same period to $5,000 per annum.

    I am seriously considering getting traumatic insurance ONLY. Any non life threatening issues I will go and get treated in Thailand, pay on my credit card and enjoy the holiday at the same time, for less money (including flights, accommodation, deductible and premium) , stress and get better care (with a smile).

    US health care is a joke, those who preach we have the “best in the world” have not looked outside its borders, never mind experienced life outside. If you are a senator or elitist, I agree, you can claim such nonsense! Back on planet earth and last time I looked we ranked 36th in the world (level with our good old friend Cuba) in life expectancy……hmmm, maybe that is because people are “afraid” to go the doctor in-case their monthly premiums rise and possibly also because we have less exercise and more fatty foods than the human body (mark 1) was designed for!!

    Blue Shield and health Insurance companies are above the law…no oversight at all. It boils down to lobbyists doing what they do best.

    Nothing to do with Obama in my opinion though Fox news would love you to believe that….really, nothing has changed, those people without insurance, illegals etc would all be treated regardless, as per normal….wake up!

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