Blue Shield of California says it will not increase rates for any individual or family plan members for the remainder of the year.
Bruce Bodaken, the chairman of California Blue Shield, San Francisco, says he still believes proposed 2011 individual rates the company filed in October 2010 were reasonable and would have led to the company losing some money on the policies.
The California Department of Insurance should do more to create a consistent, fair regulatory environment, Bodaken says.
But, in the long run, he says, the only way to improve the U.S. health care system is to control the cost and utilization of medical care.
“We are dedicated to working collaboratively with providers and regulators to address that issue,” Bodaken says.
The Jones Factor
California Blue Shield provides or administers health coverage for about 3.3 million California residents, and has 340,000 individual and family plan insureds. Blue Cross of California, a unit of WellPoint Inc., Indianapolis (NYSE:WLP), is a separate company.
California requires health carriers to submit individual health insurance rate change notices for compliance reviews, and the new Patient Protection and Affordable Care Act (PPACA), part of the federal Affordable Care Act package, now requires insurers to spend at least 80% of individual and family health coverage revenue on health care and quality improvement efforts.
California Insurance Commissioner David Jones insisted earlier in mid-2010 that large carriers submit proposed individual rate increases to an extra layer of state review, and that they wait at least 60 days after a rate increase takes effect to ask for a new rate increase.
Instead of submitting the October 2010 rate filing to the new state review system, California Blue Shield hired David Axene of Axene Health Partners L.L.C., Winchester, Calif.,
an actuarial firm that has helped the California department find errors in rate filings, to conduct a review of its own filings.
Axene concluded that California Blue Shield’s rate increase proposals were reasonable and might generate a small operating profit.
California Blue Shield now has agreed to withdraw the October 2010 rate filings.
California Blue Shield lost $27 million on individual coverage in 2010, and the decision to go through 2011 without asking for additional rate increases likely will cut revenue by about $35 million, the company says.
California Blue Shield notes that it supported an unsuccessful California health reform effort in 2002 that would have required health carriers to sell coverage without using medical underwriting and would have required large employers to provide health coverage or else pay a penalty.
California Blue Shield also been active in implementing PPACA changes, such as efforts to shift to provider payment strategies that will encourage different types of providers to work together to improve the quality of care and lower the cost.