Blue Shield of California insures hundreds of thousand customers. In Oct, the insurer announced three gradual rate increases that add up to 59 %. The state of California is not sure they believe Blue Shield, who claims that an auditor found the boost in expense "reasonable."

California increase in rate

An announcement was made by Blue Shield of California in October 2010. It said insurance costs would be going up. The health care cost increase is what caused these increases, the insurer said. The insurer also says that more people are dropping health insurance, so prices need to be increased. On October 1, the first increase hit with two more, on January 1 and March 1, to come. For more than 100,000 customers, these three increases added up to a 59 percent increase in premiums.

Called a ‘reasonable’ increase happening

After the State of California and ratepayers raised severe concerns about the rate increases, Blue Shield of California employed an auditor. The state auditors and general public were able to see this report recently. Because of the increase of health care costs, in California especially, the audit states the 59 percent increase is "reasonable." About 80 percent of premiums have to be spent on health care for the customer which the health insurer is meeting according to the auditor. Information that the state auditors wanted wasn’t included in the audit though.

No chance of stopping the change

The insurance rate changes are reviewed and approved by the State of California. There isn’t anything regulators can do though. The state approval doesn’t really matter though. The rates can stick anyway. There is not a lot of motive to get the insurance increases changed. This is why the legislature for an emergency block of the increases probably will not occur. Customers are upset due to the health insurance bill. The rates have gone up, in part, because of this bill. Blue Shield of California explained that the reason for the hike in price is because individuals are leaving the system. This is due to the health insurance reforms.

Citations

Los Angeles Times

articles.latimes.com/2011/mar/01/business/la-fi-blue-shield-20110301