SACRAMENTO, Calif. -- Customers of three California health insurers will get some breathing room after the companies agreed last week to delay rate increases for 60 days, isolating Blue Shield of California as the lone holdout.
Anthem Blue Cross, Aetna (NYSE: AET) and PacifiCare agreed to the delay to give the state Department of Insurance time to examine their recent rate filings, Insurance Commissioner Dave Jones said.
The commissioner cannot reject premium increases, but Jones said he will use the additional time to make sure the increases comply with federal and state laws. He noted that the rate requests come as many Californians are struggling through the recession and can't afford them.
Aetna and Anthem Blue Cross each had submitted two proposed rate increases, beginning Jan. 1 and April 1. Each will be delayed 60 days from those dates. PacifiCare's planned Jan. 1 increase will be delayed until April 1, the department said.
Blue Shield of California previously rejected Jones' request for a delay of its 6 percent March 1 increase, its third since Oct. 1. The three increases will boost premiums an average 30 percent for the 200,000 customers who buy private insurance from Blue Shield. Some of its customers will pay 59 percent more in premiums cumulatively after the three increases.
Jones and U.S. Health and Human Services Secretary Kathleen Sebelius, along with consumer groups, have been pressuring Blue Shield for a delay. The San Francisco-based insurer is asking an independent actuary to review its increase before March 1 and said it will give refunds, with interest, if problems are found with the rates.
"Blue Shield policyholders will not have the benefit of this additional review period to ensure compliance with the law, but I will do what is within my power to determine whether Blue Shield's proposed rates are in compliance with the law and to enforce that law," Jones said in a statement.
That includes making sure the companies provide detailed information about their premium increases, including a certification from an outside actuary.
Jones also issued an emergency regulation the day he took office last month giving himself the authority to enforce a new federal health insurance regulation that requires that 80 percent of premiums are spent on providing health care.
Blue Shield spokesman Johnny Wong said in an e-mailed statement that the rate increases are needed because of higher medical expenses, particularly hospital and prescription drug costs.
He said the insurer expects to lose $20 million to $30 million on individual policies this year, even with the rate increases.
Jones can determine if the propose rates are "unreasonable" and publicize that finding.
Consumer Watchdog Executive Director Doug Heller said Jones' limited powers show the need for a new law that would let the insurance commissioner reject excessive premium increases.