Blue Shield plans 50% rate increases in 2011

(Cuz they are all about caring...pigs! I hope they choke on their caviar!--jef)

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By Eric W. Dolan
Thursday, January 6th, 2011

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.

Insurers Set To Raise Prices, Walk Away From Consumers

Insurers Set To Raise Prices, Walk Away From Consumers
03- 5-10 02:02 PM

The market concentration for health insurance is so monopolized in some areas that insurance companies are willing to raise prices and lose customers in an effort to improve their bottom line, a leading insurance broker told Wall Street analysts on Wednesday.

In a conference call organized by Goldman Sachs Global Investment Research, Steve Lewis, a highly regarded broker at the world's third largest insurance broker, Willis, painted a picture of the health insurance market in which employers seem likely to be priced out of coverage.

Noting that "price competition" between insurers was "down from a year ago," Lewis relayed that "incumbent carriers seem more willing than ever to walk away from existing business."

The phenomenon of insurers pricing their policies beyond where consumers can afford it seems to be already taking place. Last month Anthem Blue Cross told customers it would hike their health insurance premiums by as much as 39 percent (with the expectation that some would drop coverage altogether). In December, the Huffington Post reported that Aetna was planning on losing more than 600,000 customers by raising prices on their consumers in 2010.

Insurers are able to do this in part because the markets in which they operate have no adequate competition, suggests Lewis. The broker noted that "the smaller client segment" was "increasingly frustrated" with the renewal of their coverage and was "evaluating potential self-funding with stop loss protection" instead. Lewis added that employers in many markets knew "that they're not going to be able to trade down pricing very significantly" (i.e. find cheaper coverage) and, as such, would likely only change plans or become self-insured if there was a "fairly significant" disruption in service.

"As I mentioned at the outset, it was without a doubt the most challenging renewal cycle in my 20 years of this business with employers really struggling with how and what was going to drive their decision, combined with the lack of aggressive and competitive pricing in the marketplace," Lewis said.

The remarks are as clear an indication as any that while the health insurance industry suffered greatly from the recession it remains remarkably well positioned to recoup those profits going forward -- principally because companies can raise prices without worrying about the market hit it will take.

The Democratic-authored health care package would eliminate the anti-trust exemption that health insurers enjoy, require insurers to spend a high percentage of their funds on medical costs and create a commission that would oversee unexpected hikes in premiums. And yet, Lewis says that the clients he represents (employers who purchase health care coverage) have largely soured on the reform process even if they are favorable towards the overall goals.

"I think most people would acknowledge that there's a need for health care reform, employers continue to be very frustrated," he said. "But I would also say that many of them still view the legislation and the partisanship coming out of Washington as possibly the medicine worse than the disease. So, many employer groups that we're talking to feel like it would be a shame to lose an opportunity to do something with respect to health care reform. But many are starting to feel like maybe nothing is better than something in this current environment."

A call to Lewis for additional comment was not immediately returned. Below is the full transcript of his remarks.