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Blue Shield of California plans huge rate increases

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Thursday, January 6, 2011 15:12 EDT
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Health insurance costs for hundreds of thousands of individual policy holders with Blue Shield of California could go up as much 59 percent this year, according to the Los Angeles Times.

The California health insurer has announced it is seeking to raise rates an average of 30% to 35% for 193,000 policy holders due to rising health care costs, the fact that healthier people are dropping coverage during a bad economy, and other factors.

Roughly one in four of Blue Shield of California customers are expected to see increases of more than 50% over five months. Most of those who hold individual policies are self-employed, aren’t covered by their employer or have been laid off.

“Rates are going to continue to rise unless the cost of medical care is brought under control,” Blue Shield spokesman Tom Epstein told the LA Times. “We need to reduce what we pay to hospitals, medical groups and pharmaceutical companies.”

“The rate increases reported today cover a period of more than one year and have almost nothing to do with the federal health reform law,” Blue Shield of California said in a statement. “These rates reflect trends that were building long before health reform.”

Despite the rate hikes, Blue Shield of California said it expects to lose tens of millions of dollars on its individual health care business in 2010 and 2011.

Last year Anthem Blue Cross proposed a 39 percent increase for its nearly 800,000 customers, but a public outcry forced the insurance company to settle for a maximum hike of 20 percent.

Anthem Blue Cross announced Wednesday that it expected to raise rates again an average of 9.8% for individual policy holders.

Health insurance premium hikes greater than 10 percent would be reviewed by state or federal regulators under new rules proposed by the United States Department of Health and Human Services in December of 2010.

The new regulations would force health insurers to publicly disclose proposed increases and the justification for them.

“The proposed regulation will help safeguard consumers from unreasonably high rate increases by providing consumers with detailed information on proposed increases,” the department’s website states. “Disclosing proposed increases, along with the insurer’s justification, would shed light on industry pricing practices that some experts believe have led to unnecessarily high prices.”

On Wednesday, Rep. Lynn Woolsey (D-CA) introduced a measure to establish a robust public health insurance option as a supplement to the Patient Protection and Affordable Care Act. She said the public option would lower insurance costs and address deficit concerns.

Meanwhile, House Majority Leader Eric Cantor (R-VA) vowed to pass legislation to repeal the new health care reform laws in the House, despite such a repeal’s inevitable death in the Senate.

The Congressional Budget Office has estimated a repeal of Obama’s health reform laws would cost the US $1.2 trillion over the next 20 years.

 
 
 
 
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