Blue Shield proposes 59-percent rate hike

SACRAMENTO He's been on the job less than a week and already California Insurance Commissioner Dave Jones has had to play hardball with Blue Shield, which just told nearly 200,000 California customers with individual health policies their rates are going up as much as 59 percent as of March 1.

"I have asked that the company postpone its rate increase 60 days in order to afford me the opportunity to fully review the proposed rate increase," said Jones.

The move comes less than a year after Anthem Blue Cross tried but failed to get a 39-percent rate increase.

Blue Shield says its rate hike averages about 33 percent, but this would be the company's third rate hike since October.

San Diego resident Michael Fraser, who doesn't have insurance from his job, is seeing his monthly premium jump from $271 a month to $431 -- that's 59 percent.

"It's really devastating. I don't know what to do," said Fraser. "I'm seriously considering cancelling my insurance and taking my chances. I'm 53 years old, and that's scary."

Blue Shield says medical costs for the individual market are rising rapidly, a trend the industry echoes.

"They've been increasing and people, particularly people who buy insurance individually don't belong to a big pool of people like group health insurance," said Patrick Johnston, president and CEO of /*California Association of Health Plans*/. "So when costs go up, they have to pay those costs in the form of higher premiums."

In a statement, the health insurer says even with these rate increases, /*Blue Shield of California*/ expects to lose tens of millions of dollars on its individual healthcare business in both 2010 and 2011.

There have been numerous attempts in the state legislature to cap health-insurance hikes, but they've been vetoed by Governor Schwarzenegger.

The insurance commissioner has no authority to regulate health plans rates, like he can with auto insurance.

"We need to take the next step which is to have real regulation and authority to deny unreasonable and unjustified rate increases," said healthcare advocate Anthony Wright.

State Assemblyman Mike Feuer (D-Los Angeles) will try this legislative session to give more authority to the insurance commissioner to stop rate increases. He hopes Gov. Jerry Brown will sign it.

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