Blue Shield cancels insurance rate increase

The health care premium increase, averaging 6.5% and going as high as 18%, would have been the third in recent months by the insurer, which had faced pressure from state officials and consumers.

March 16, 2011|By Duke Helfand, Los Angeles Times

Blue Shield of California's decision to cancel a big rate hike for nearly 200,000 people followed mounting pressure from the public and political leaders. But an unforeseen factor may have made the retreat easier for the company to accept: It's paying out less for medical claims than it had anticipated.
And it's not just Blue Shield. Major insurers including WellPoint Inc. and Aetna Inc. also say that medical spending has been lower than projected recently, saving the companies millions of dollars in payouts.

Company officials say that is largely because people are going to the doctor less. Many have switched to cheaper policies that require them to shoulder a greater share of the cost — and that has them thinking twice about discretionary visits.
"In times of recession, you see people choosing to forgo elective procedures because of their budgets," WellPoint spokeswoman Kristin Binns said.
That trend could bolster the arguments of some healthcare experts who contend that Americans overuse medical services because they generally don't have to pay much for them, and that the only way to bring rising healthcare costs under control is to shift more of the expense to patients.
If people continue to be more thrifty in their medical decisions, it could slow the rise of healthcare costs, some believe.
"This is a win-win potentially for both health insurers and the insured," said insurance analyst Gavin Magor of Weiss Ratings in Jupiter, Fla., which recently reported no rise in medical spending for hundreds of insurers nationwide for most of 2010.
But with many people struggling just to get by, shifting more health costs to them carries the risk that they will skip vital care, health analysts say.
"When you put preventive services off, you put off appropriate care that may have helped save you from having a more costly condition," said Shana Alex Lavarreda of the UCLA Center for Health Policy Research.
On Wednesday, Blue Shield withdrew a planned May 1 rate hike for individual policyholders that would have averaged 6.5% and gone as high as 18%, saving customers $35 million to
$40 million this year. That increase followed other recent hikes that, cumulatively, would have driven up rates as much as 86.5% since October.
The rate hikes had triggered widespread criticism since they were first disclosed by The Times in January.