Starting March 1, 2011, it is going to cost more to have insurance with Blue Shield, if you live in California. Blue Shield is about to increase the cost of premiums by a whopping 59%. Clearly, this is going to make it very difficult for people who currently have health insurance with this company to be able to afford to continue their health insurance policies.
Blue Shield insists that it’s decision to go ahead with this rate hike has “almost nothing to do with the federal health reform law”. Instead, the company is saying that their costs are rising very quickly, and that this is because of a few reasons: Providers of care have increased their costs, and also because more people are using the health insurance. Another reason is because the bad economy is causing the people who are healthy enough to get by without health insurance to drop it. This would, essentially, leave Blue Shield with a higher percentage of customers who require expensive medical care then perhaps the insurance company would like.
One would think that the laws enacted as part of the Affordable Care Act would prevent things like this incredibly high rate hike from occurring. After July 1, 2011, any insurance company that imposes a 10% or higher rate hike will wind up with extra scrutiny from state regulators and the federal government. Blue Shield is doing this rate hike four months earlier than when that particular regulation will take effect. In 2014, the health insurance exchanges will be opened. At that time, states can ban insurance companies that have had a questionable history of rate increases from participating in the exchanges at all. Right now, there doesn’t appear to be any consequence for what Blue Shield is doing to it’s customers.
Another problem is that the Insurance Commissioner of California doesn’t actually have the legal authority to force Blue Shield, or any other insurance company, from doing exactly what Blue Shield is doing. Each state can individually decide what powers it want its Insurance Commissioner to have. This means that some states do not have any system in place to review what insurance companies choose to charge their customers. It also means that the Insurance Commissioner of California doesn’t have the power to stop Blue Shield from increasing it’s customers premiums to however high it wants to.
It is worth noting that the federal government sued Blue Cross Blue Shield of Michigan recently for making agreements with hospitals that would give their insurance company a better rate on the cost of medical care and supplies, while at the same time requiring the hospitals to charge other insurance companies a much higher rate for the same things. It is also worth noting that Blue Cross Blue Shield of Michigan increased its rates 250% between 1999 and 2004.
Image by Phil Roeder on Flickr