Blue Shield Life and Health company wanted to close most of its individual insurance plans. California Insurance Commissioner Dave Jones disapproves of this closure, and says that it does not comply with state law. The insurer says that it will work with the Insurance Department before any rate hikes are imposed.
In California, Blue Shield has stated that it intends on closing most of the individual health insurance plans that it currently offers. This is creating some controversy. The decision would affect around 248,000 people who live in California. To me, it sounds as though the insurer wants to get out of the individual health insurance market.
California Insurance Commissioner Dave Jones says that Blue Shield’s proposal for closing the insurance plans doesn’t comply with requirements that are in the California state insurance code. One problem is that it isn’t fair for the insurer to place the people whose plans are about to close into a group that has a much smaller actuarial pool. This act could cause the price of their premiums to increase because there would be less people to spread the cost across. He said:
“When consumers purchase health insurance, they should not have to worry that their health insurer will make decisions to open new products and close others in ways that put the policyholder at risk of being pooled with unhealthy lives whose claim costs are likely to cause premiums to increase”.
Around 20,000 customers of Blue Shield are currently using the Vital Shield 2900 Plan. This group could find themselves completely without insurance coverage, thanks to Blue Shield’s decision to close plans. This particular insurance plan doesn’t include transfer rights without going through underwriting.
A lawsuit has been filed against Blue Shield by a consumer group called Consumer Watchdog. The class action lawsuit was filed in San Francisco Superior Court recently. Part of the claims by Consumer Watchdog include:
“Blue Shield has used enormous rate increases, and the threat of rate increases, while closing all but one high-deductible health plan or policy block of business to force patients into lower-benefit coverage, in violation of state law.
Additionally, Blue Shield is engaged in illegal gaming of California’s dual-regulator health insurance system by alternately closing older blocks of business under one agency and opening new blocks under the agency in order to push older, sicker, consumers into lower-benefit higher-deductible coverage. These high-deductible health plans and policies require consumers to pay more money out-of-pocket for medical care before Blue Shield pays for any medical benefits. Many consumers are priced out of health care coverage altogether and left uninsured”.
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