SONOMA -- California Insurance Commissioner Dave Jones continued to apply public pressure on Blue Shield of California and other large insurers for recent rate hikes, saying the increases will negatively impact individuals and small businesses disproportionally and that the increases aren't in tune with national medical inflation rates.
[caption id="attachment_70479" align="alignright" width="224"] Dave Jones[/caption]
In an interview with the Business Journal between speaking engagements in Sonoma County on Thursday, Mr. Jones laid out policy prescriptions he said might help alleviate the upward pressure on premiums, which are slated to increase at an average rate of nearly 12 percent for Blue Shield policy holders, while insisting that many health insurance carriers have unnecessarily raised rates.
Chief among his solutions included allowing the commissioner to reject what the Department of Insurance determines to be excessive rate increases, as is the case in 34 other states.
"Unfortunately for California, it's one of the last states to give its insurance commissioner the ability to reject insurance or HMO rate hikes," he said. "What's particularly frustrating is that I can reject rates for auto insurance, medical malpractice, property-casual insurance," and other lines.
"This is a big missing piece of the Affordable Care Act," he added, noting that most of health care reform won't address the continued cost increases of health insurance for small business and individuals.
As of March 1, both Blue Shield and Aetna Inc. went forward with rate increases of nearly 12 percent on some 268,000 policy holders, despite protests from both Mr. Jones and the Department of Managed Health Care.
Mr. Jones said he asked Blue Shield if it would consider a smaller rate increase that would have saved consumers about $16.5 million. The San Francisco-based nonprofit insurer declined.
Steve Shivinsky, a spokesman for Blue Shield, said the rates are reasonable for several reasons, including that its premiums are competitive with, and in some cases lower, than its competitors, and that its rate increases are lower than other recent hikes from competitors.
"It's important to point out that these increase are needed to keep pace with medical costs," Mr. Shavinsky said. "Those continue to rise, particularly for the members we're covering at much greater rate than what's being reported."
The company also said its rates reflect "the increases needed to keep pace with medical costs for our members in 2013," arguing that the costs for hospital and physician services, prescription drugs and diagnostic tests continue to rise.
Under the Affordable Care Act, all insurers must meet a federal medical loss ratio, requiring 80 percent of all premium dollars be spent on care, and not administrative costs or executive compensation. Blue Shield said its rates comply with the law, and that is has lost tens of million of dollars in the individual market recently.
Mr. Jones rejected the arguments on medical cost increase.
"In fact, the recent data indicate that medical costs nationally are going down," Mr. Jones said.
Mr. Shavinksy said Blue Shield shares the concerns of state regulators, but that the individual market in California has seen higher than national averages on medical spending. Blue Shield does not think granting the insurance commissioner the authority to reject rate hikes is necessary, pointing to measures in Obamacare that require 80 to 85 percent of all premium dollars are spent on care.