Blue Shield Rate Hike Fuels California Campaign For Insurance Reform

SAN FRANCISCO (KCBS) – Health insurance premiums for more than 300,000 Blue Shield customers in California went up eight percent under a rate increase that took effect Thursday.

“Our rates for individual and family plan products reflect the actual costs that we pay doctors, hospitals and drug companies for the care that we receive, and unfortunately those costs continue to rise,” said Steve Shivinsky, vice president of corporate communications at Blue Shield.

KCBS’ Margie Shafer Reports:

Consumer advocates trying to qualify a ballot initiative aimed at reigning in premium costs disputed Blue Shield’s analysis of what’s driven up insurance prices.

“These rate increases are not just costs going up,” said Carmen Balber, spokeswoman for, a project of the Consumer Watchdog Campaign Committee that is gathering signatures to put the initiative before voters.

Balber cited statistics showing that insurance premiums rose 153 percent in the last decade, a time when inflation was 29 percent.

The non-profit Blue Shield has faced particular criticism for maintaining high cash reserves while passing on cost increases to customers. Shivinsky said the size of the company’s reserves is not related to provider costs.

“We’re doing our best to work with providers, help improve quality and reduce cost. We’ve voluntarily pledged to limit our income to 2 percent of revenue,” he said.

The initiative to require insurance companies to justify under penalty of perjury that rate increases are necessary, and seek government approval before higher premiums take effect, has been endorsed by California Sen. Dianne Feinstein.

(Copyright 2012 by CBS San Francisco. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

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