Health Insurance: Blue Shield Rate Hikes

The Los Angeles Times is reporting  that Blue Shield's premium hikes are hitting some policyholders with as much as an 86% premium increase.  Click HERE for LA Times article.  Higher insurance premiums sought by Blue Shield of California in recent months would drive total increases as high as 86.5% for thousands of individual policyholders, new documents show.  Blue Shield said the three rate increases reflect the soaring costs of medical care and the greater use of expensive healthcare services by policyholders, along with new state and federal mandates.

In explaining the need for the increases, company spokesman Tom Epstein also said that Blue Shield had underpriced some of its individual health plans, leaving the company without enough revenue to cover the cost of medical care for members. As a result, the insurer has had to raise premiums substantially on its money-losing products.

The U.S. Justice Department is widening a probe into whether Blue Cross Blue Shield health-insurance plans are artificially raising premiums in several states by striking agreements with hospitals that stifle competition from rival insurers.

Federal investigators and some state attorneys general have sent civil subpoenas to "Blue" health plans in Missouri, Ohio, Kansas, West Virginia, North Carolina, South Carolina and the District of Columbia, according to people familiar with the matter. The investigation is examining whether dominant health plans around the country are forcing hospitals to sign anti-competitive contracts that unlawfully inhibit them from doing business with their rivals.

Assembly Bill 52 (Feuer) is up for hearings this Spring.  The bill simply gives California's elected insurance commissioner the power to stop excessive premium hikes before they take effect.  Right now, Insurance Commissioner Dave Jones is powerless to stop Blue Shield or any other health insurance company.