Blue Shield Seeks Rate Hikes and California Nears End of Federal Stimulus Package Aid

Fri Jan 21 18:00:22 PST 2011

January 5, 2011
Blue Shield of California Seeks Rate Hikes of as Much as 59% For Individuals
Insurer says the increases result from fast-rising healthcare costs and other expenses resulting from new healthcare laws. The move comes less than a year after Anthem Blue Cross tried and failed to raise rates as much as 39%.
LA Times

By Duke Helfand, Los Angeles Times

Another big California health insurer has stunned individual policyholders with huge rate increases — this time it's Blue Shield of California seeking cumulative hikes of as much as 59% for tens of thousands of customers March 1.

Blue Shield's action comes less than a year after Anthem Blue Cross tried and failed to raise rates as much as 39% for about 700,000 California customers.

San Francisco-based Blue Shield said the increases were the result of fast rising healthcare costs and other expenses resulting from new healthcare laws.

"We raise rates only when absolutely necessary to pay the accelerating cost of medical care for our members," the nonprofit insurer told customers last month.

In all, Blue Shield said, 193,000 policyholders would see increases averaging 30% to 35%, the result of three separate rate hikes since October.

Nearly 1 in 4 of the affected customers will see cumulative increases of more than 50% over five months.

While most policyholders received separate notices for the successive rate hikes, others were given the news all at once because they had contracts guaranteeing their rate for a year, Blue Shield spokesman Tom Epstein said.

Michael Fraser, a Blue Shield policyholder from San Diego, learned recently that his monthly bill would climb 59%, to $431 from $271.

"When I tell people, their jaws drop and their eyes bug out," said Fraser, 53, a freelance advertising writer. "The amount is stunning."

Like many people who hold individual policies, Fraser is self-employed. Others who carry such insurance include people who aren't covered by employer plans or who have been laid off.

The Blue Shield increases triggered complaints to new Insurance Commissioner Dave Jones, and they could prove to be an early test of how the former Democratic state assemblyman deals with rate hikes and the insurance industry.

Anthem's attempt to raise rates by up to 39% led to national outrage and helped President Obama marshal support for his healthcare overhaul. The insurer was ultimately forced to back down, accepting maximum rate hikes of 20%.

Jones said the Blue Shield move underscored the need for the Legislature to give the insurance commissioner legal authority to regulate insurance rates the same way he does automobile coverage.

At present, the commissioner can block increases only if insurers spend less than 70% of premium income on claims. Jones' office said Blue Shield's March 1 increase was under review.

"Blue Shield's increases pose the same problem posed by Anthem Blue Cross last year and other health insurers as well," Jones said in an interview. "My hope would be that Blue Shield would reexamine these rate hikes, particularly in the face of the impact they are having on individual policyholders."

Blue Shield said the cost of health coverage was being driven up by large hospital expenses, doctors' bills and prescription drug prices. Blue Shield's Epstein said other factors also contributed to the three increases in five months.

On Oct. 1, he said, Blue Shield imposed increases averaging 18% and as high as 29%. Those hikes had been delayed for three months while state regulators examined Blue Shield's filing, costing the company tens of millions of dollars.

Epstein said Blue Shield raised rates again Jan. 1 to pay for changes under the national healthcare overhaul and a new state law that bars insurers from charging women more than men. (Some policyholders will pay less under the state gender law, while others will pay more.)

A third round of hikes scheduled for March 1 comes in response to rising healthcare costs, Epstein said. Those increases will average 6.5% and be as high as 18%.

Some policyholders have seen their bills rise gradually over the last five months, while others will see the charges lumped together March 1.

Read more: 
latimes.com/health/healthcare/la-fi-insure-rates-20110106,0,6975599.story

January 6, 2011
California, Other States Nearing End of Federal Stimulus Package Aid
California Healthline
California and many other states likely will continue facing significant budget challenges over the next few years, particularly as federal stimulus funding dries up, theAP/San Francisco Chronicle reports.
Stimulus Funding
In 2009, the Democratic-led congress passed an $814 billion federal economic stimulus package to boost the economy and help states provide services to residents.
By June of this year, the federal government will have spent about $165 billion on temporary aid to states. A large portion of the funds has gone to education and health care, for expenditures such as reimbursing hospitals and physicians for treating the growing number of Medicaid beneficiaries.
California's Funds
California has received about $51 billion to date out of the $85 billion total that it expects to receive from the stimulus package, according to a state website that monitors stimulus spending.
About half of the funds California has spent so far have gone toward:
       • Medi-Cal, California's Medicaid program;
       • Unemployment insurance;
       • Food stamps; and
       • Other safety-net programs.

Assistance Drying Up

Although many states have benefited from the stimulus package, most of the funds will run out this year. Without additional federal assistance, many state legislatures will not have sufficient funds to maintain current service levels and could impose new budget cuts.

According to the National Conference of State Legislatures, 31 states and Puerto Rico face budget deficits totaling $82.1 billion for fiscal year 2012.

California's Senate President Pro Tempore Darrell Steinberg (D-Sacramento) said it is disappointing -- but not surprising -- that states are unlikely to receive more federal assistance this year (Freking, AP/San Francisco Chronicle, 1/6).

Read more: 
http://www.californiahealthline.org/articles/2011/1/6/california-other-states-nearing-end-of-federal-stimulus-package-aid.aspx#ixzz1AMjYefob

Anna Parks &
Brian Potts MD, MBA
Managing Editors, CAL/AAEM News Service
University of California, Irvine

Contact us at: calaaem.news.service1 at gmail.com

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