Announcement on Blue Shield of California Rate Increases

Announcement on Blue Shield of California Rate Increases


(Music – Introduction) My name is Dave Jones
and I have the privilege of serving as California’s Insurance Commissioner they have an important announcement
to make regarding Blue Shield and in particular a rate filing and a rate increase by Blue Shield, which will impact approximately 260,000 of its individual customers. A rate increase that went into effect on March 1st of this year (2013) the average 12-month rate increase that Blue Shield shows imposing
on its customers is 11.7 percent. During the same12-month period some
of these customers will experience rate hikes as large as 19.9 percent and for some the rate increases
will be even higher once geographic location, family size, and age are taking into consideration. This rate increase by Blue Shield
is simply unsustainable for California’s consumers. But it’s also important to put
this in context this is only the most recent
increase by Blue Shield. This most recent recess we understood in
context with other increases that Blue Shield has imposed on its individual customers. when considering earlier
increases over a two-year period the average rate increase for these
260,000 Blue Shield customers is 20.5 percent these are the type of rate hikes that are simply unsustainable, and deliver a
financial blow year after year to California’s families and individuals
up and down the state We’ve heard from consumers
who tell us that they can no longer hang on, they simply
can’t afford health insurance any longer as they struggle to make their rent or mortgage payments
to put food on the table and clothes on their backs and their
children’s backs. So today, I’m here to announce after our
department’s very careful and thorough review that we have found the rate
increase by Blue Shield to be unreasonable. Before I announce the
basis of this finding, and what this means, a
little background is warranted. Under California law all individual and small business health
insurance rates have to be filed with the California Department of Insurance. The Insurance Commissioner does not
have the authority however to reject excessive health insurance
rate hikes. The health insurers are free to set
their rates as high as they please, and they do exactly that. We however review these rate filings
very carefully. Our department as health actuaries and other professionals who
look at all aspects of the rate filing. Our actuaries look at the
past claims history of the health insurer. We look at medical
cost trends, we look at utilization trends, we look administrative
expenses, we look at profit or other overhead, and many other elements as well. We check to see if the insurance
companies provided sufficient documentation has substantial evidence to back up the assertions and projections
it is making in its rate filing. After thorough review by the
Department of Insurance. I’ve concluded for several reasons why
Blue Shield’s rate increase on 260,0000 of its customers is
simply unreasonable. These reasons are as follows: first, excessive administrative costs. Blue Shield projections for
administrative expenses of 20.2 percent of premium, is significantly higher than major health insurance carriers, in their
individual market filings to the department. Blue Shield’s administrative expenses are
simply unreasonable and excessive. Second, overstatement a projected claims. The department’s actuaries found that
Blue Shield overstate it’s projected utilization trend or projected claims. Blueshield
states the projects utilization medical services grow by 3.5 percent in 2012 and 3.9 percent in 2013. However, this projection is more than one
percent higher than the average utilization figures accompanies observed
in the past three years the companies pass claims experience
simply does not support their projections in this rate filing further who shows projections also higher than the one percent above the average rate the company’s
observed as it’s in a moment ago in the past three years so as a result blue shield is not only miss
projecting utilization but it’s also projecting a portrait of
ten point six percent which is also not reasonable according
to our actuaries blue shows projection legalization trend
and core trend is not reasonable to over projection tools asian significant
impact on the development of the rate increase driving the rate increase higher that
would have otherwise be hundred more reasonable projection utilization headquartering dan third unfair cautiously blue shield attitude point three percent
to individual policyholders premiums into account for projected losses due to
hit them conversion plans that’s important explain what hippa
conversion plans are when people lose their employer-based health insurance
they’re entitled to convert to an individual health insurance plan without
medical underwriting blue shield is taking the cost
associated with these plan conversions loading it into the premiums paid by
other individual market policyholders even though those individuals are not themselves converting we determine that this cost shifting is unreasonable because projected losses who come from people
who come out of the group market should not be shifted to those renewed individual essentially
what lucia was doing is asking that it’s two a sixty thousand
customers in individual market subsidize those individuals are shifting
out of the group market and we simply think that’s unreasonable swell now blueshield will undoubtedly tell all of
you that the stand by their projections but
this one remind you we also heard them assert projections just last year the year before but they still have to read a ten-point
eight million dollars in twenty twelve to individual policyholders because they failed to meet their
projections with regard to the new medical operational requirements of the
affordable care act so that’s additional evidence with regard to our belief and our conclusion that the rate increase here is based on unsupported unsubstantiated evidence andover projects what their rate increased needs to be to make sure the company’s costs are
covered now it’s beginning to feel a little bit
like groundhog day today uh… because it’s ten before you get uh… to declare yet another health insurers radar reasonable uh… you’re
probably reminded we’ve done this a couple of times health insurers issue must continue to
impose double-digit premium increases each year despite the fact that their dad i do not
support the higher rate in these rate increases are simply
unsustainable for california’s helps explain why we have a two seven million
californians and he given point here without health insurance i guess we should reduce its rate
increase based on our actuaries findings but blueshield rejected my request that they reduce its rate increase now in some cases i’ve succeeded in
convincing health insurance c_e_o_’s to lower their proposed rate increase after
actually seven value-added their rate filings and found them to be
unreasonable for example united healthcare is
recently agreed to read decrease rate decrease five twenty percent on average
for its small business customers after our actuaries review departments
after the department reviewed health yet health care’s filings we work with united health care and
agreed to this rate decrease of five point eight percent someone acknowledgement health care’s
responsiveness to the needs of their small business policy course in this
regard at the end of the day health insurers do
not have to respond to our determination that the return reasonable because insurance go through the state
of california does not have the authority to reject outright excessive
health insurance rate hikes so for example last year i
concluded that the small player health insurance for increase was unreasonable but the fortune anyways estate anthem
blue cross in january both companies displayed are finding a
cure rates when reasonable increase rates anyways tonight include a blue shields rate
increases unreasonable but unfortunately there’s nothing i can
do to stop the rate increased by consumers because i don’t have the legal
authority to reject and have my determination to binding
upon health insurers california federal law allot health
insurers to charge consumers whatever they wish even if i conclude that rates they’re charging arteries for excessive now over the last
six years i’ve offered three separate bills as a member of the state assembly to give the insurance mission the same authorities
over health insurance rates as insurance commissioner has over auto
and home owners another cashier eight sandra locke a proposition one oh three proposition one oh three was enacted by
the voters in nineteen eighty eight and it gives the insurance mission the
authority to reject excessive rate hikes for auto insurance home insurance on the
property of the cash insurance i actually have the authority of
exercise to over medical malpractice insurance have reduced those rates and
saved medical refiners forty point six million
dollars as a result but i don’t have that authority over
health insurance and that’s why dot that’s legislation unfortunately the legislation was blocked by the health insurance niche melodic the last two years as a statesman related insurance
commissioner sponsored a fourth bill that would give the insurance commission
the authority to reject excess of health insurance and each of our rate hikes again merely allowing insurance we should do what he or she has the authority do for
all these other charts product lines where we save consumers and businesses
tens of billions of dollars his other product line to might note
that just last month uh… we issued a determination uh… and incision rollbacks state farms homeowner’s
insurance rates for over a million state farm customers twelve point six percent
saving them about a hundred fifty million dollars but i don’t have that story of the law
for health insurance it’s very frustrating uh… because uh… tries we might to get that
authority but we’ve been blocked time and time
again by the health insurance page in a lot no what makes us particularly pressing as
we’re now moving into full implementation of the affordable care
act where everyone by law will be mandated to have health insurance before mckarrick regrettably does not have a provisioning giving
insurance regulators the authority to reject excessive health insurance an h more
rate hikes it where it will make sure the law one again that’s up each state to fill over thirty four states have given their insurance commissioners the authority to reject excessive health
insurance in each of our reacts for national for him we continue to be behind the curve and so we are left here today with a determination by the department
and charts that blue shields rate increase imposed on true sixty
thousand customers of eleven point seven percent is unreasonable the law simply does not provide me with the authority to make that determination binding and that is extraordinary frustrating
for me is insurance commissioner as well as for the consumers who have to pay that rate we had a chance now to hear from two of
those consumers uh… with me on the stage here isn’t really a stage within the run here uh… is gracie arthur los angeles uh… will see hurry rising eighty
dollars as a result of this rate increase he’s
been a customer blue shield for twenty years and she will explain to you uh… impact of this rate increase on her i think that insurance commissioner very
much for inviting me to be here because i’d hopeful to be speaking for thousands and
thousands of people out there that have been getting ripped off by the year
health insurers for many years i’ve been a blue shield customer for
over twenty years and this is the first year in twenty
years that i’ve actually met my deductible and they had some small payments to make
and i had to fight for every dollar that they were supposed to pay now they’re hitting me with another race which is basically pay more d rancher and get less from
your insurer so as far as i’m concerned not only is
this really uh… nick not in any way justified but the insurer as a whole is not doing job it should be doing for its insurance so im very happy that we find them in
insurance commissioner who’s actually going to do something about the
insurance companies i can tell you that uh… i spent six months trying to get lucio to appropriately paid bills that are
supposed to be covered benefits and they’ve made a lot of money off of
me paying him for twenty years and only at once collecting a relatively
small amount of money for them and i’m just one person and i’m a pretty
squeaky wheel so i know how to take care of myself but
most people out there don’t know how to get past you know computer voice hand who round
after round of person they spend more time and effort uh… trying not to help you and
actually helping their consumer get what they’re paying for insurance and if there is an initiative people
should never be fooled to vote based on lobbyists dance where they have paid actors and as a member of the screen actors
guild myself for many years if you’re working actor which i’m not you have insurance and very good insurance and those people
are paid to do that is that fair not consumers and they’re not blue shield
customers and we need definitely to have the state of
california be able to regulate the rates to protect the consumer so i think that’s a very important thing
that that’s being done here the other thing i question is how one non-profit police they call themselves a nonprofit ken paid their c_e_o_ almost four and a half million dollars a
year and that is four times more an anthem blue crosses pain which is
supposedly a for-profit so if they need to make some cuts in
their expenditures they might start there so i really applied the effort to get
the commissioner the right to just rates and regulate rates in the
state of california went our new health care le consent they have a lot of customers and those
customers are in need some protection from them and so that’s why i’m here and hopeful that blue she’ll have some amount of
conscience will take away this huge rate increased eighty dollars that’s
eighty dollars a month times twelve as a lot of money that’s fine here integrity and just at to be clear so gracie’s as result increase gonna pay slightly
less than senator dollars a month for her help insurance based on the
figures that i i have six ninety one a payment we also have uh… on the phone i
believe uh… news rise cup san francisco uh… she also is a blue shield customer and would like to share with them those
of us on the call and also those of us in the
hearing room uh… her experience and the impact of
this rate increase on her ron sorry there and thank you we can go ahead maa uh… every on them ordinary and help yet uh… company mike boorda out here and i think my help and wahan individual uh… that uh… uncritical black people
development and i believe thinking and pray that god uh… figures but and allah akbar it greatly william deductible equine in
twenty-five years aren’t they you know grateful helped him needed
overnight by that help paul uh… what struggle to get them paid for and have been alone i’d emanate uh… they helped me larry
uh… help op and it about egon show and going to go given uh… no uh… group him uh… and with the admitted thankyou like all of the joked uh… them you
know work not that what and uh… angry apartment uh… newly uh… without without people etc uh… naukri uh… elected nightmare an inherently fashion either app all art uh… rape will uh… it and and and and and all component here
of property no remember yeah i think that we had purported uh…
update regarding app mind-body something when
right away uh… i hope uh… it word again and health care uh… at baja imprimatur hair what happened people wiped out thing you
have network abdomen another at yeah again now right back uh… uh… everywhere mine monthly
great act uh… donation angry help binder uh… grateful uh… or adult hope their them prosecutor chick so were please to take questions from
those who are in the hearing them first and then uh… mate will go to those
around us conference call let me see if any of the folks in attendance here in here and
have a question yes sir up half okay all wine comebacks politically why is the saavedragalindo option uh…
actually shopping for another carries an interesting process i thought of that
may be switching to uh… anthem blue cross and its peak they still did pre-existing so
not that it had anything major you know not what i try to take good care of
myself so i don’t mean my deductible but they will give you a higher rate if they want just he t you you know i am like the new health care bill so i i was going to do that because i’m
so frustrated friction and then i found out to do that then
maybe make so if you’ve had uh… little basal cell taken off from the side or
anything like that that all goes and raises your rate even now that’s a common kinds of things and and
not serious so witnessing any money and then i understand anthems customers
and not all excited about that might have a dirty some of the same problems at retail org it doesn’t take care of the ever-rising
rates of health insurance post on individuals small march businesses
because people care act doesn’t have any authorization to insurance regulators to
reject excessive rate hikes it is the big comission in your formal corrected
one etc falling upon states to fill thirty four
states have tilted bypassing state laws to give their insurance question if the
reader reject excess of health insurance victorinox california’s done that for
just about every other jurors product line but health insurance in h more product and despite my best efforts over the
last six years to california pass a law like that the health insurance h_m_o_ lobby which
is extraordinarily influential and powerful has blocked that legislation if we will carry it does salty
pre-existing condition problem uh… and so the good news in twenty
fourteen is that health insurers a little longer will be able to deny dolls health insurance based on pre-existing conditions or
under right or charge based on pre-existing
conditions that doesn’t mean that the rates are
going to go down am i believe the rates are going to go
up and they’re gonna go up dramatically for a number of reasons uh… and so because one of those does the absence of
any direct authority the affordable care act or state law to give the insurance regulator the
authority to look at these rates to require the companies to justify them
and when they failed to do so to make that determination the kercher’s
fisher binding when the rates are deemed to be
excessive or unreasonable uh… so sadly although there many good
things before will care act and we’re working very hard implemented here in
california at my partners one leading agencies and
doing exactly that it’s not gonna solve the problem of
ever-increasing rates uh… that needs to be solved by teach state
law further questions in the room opt-out yes sir did unfortunately affordable care act also
did not include the public option had the public option included i think
there would have been more competition because he would have had one entity in the market uh… that was focused on providing health insurance and not worry
about profits frankly has uh… both gracie and ros mentioned we don’t
really see much pricing difference between the non-profits in the for
profits in the california health insurance in h_m_o_ market and so when you see a non-profit
increasing rates uh… and when you look at their
administrative cost is the case here it really gives you pause that’s one
reason sweaty found this particular retirees most because of the enormity of
their uh… it ministry of costs as a
percentage of total premium there over projection of utilization
over projection of court trends are cautious king with regard to the hip conversion plans i don’t think unfortunately we’re gonna
see uh… new entrance to the market after twenty fourteen uh… in fact we may see a narrowing of market participants in the sense that not all of the
participants in the image of culture its market will be participating in the new health
benefits exchange cover california uh… so i worry that instead of a
broadening of competition we may have a narrowing of competition and that’s one
of the reasons why i’m fearful uh… that rates will continue to go up
after twenty fourteen arthur questions from members of the
media that aren’t hearing room operator when we go now to those that
are on the phone india had in had mister help you’d okay pearly we’ve been very thorough or it had uh… here and lloyd uh… our now uh… california likes to do things
differently than any other state so like every other state and church worry in
the union california has divided uh… the regulation of the health
insurance market between two agencies uh… armored sure it’s what we regulate principally health insurance products
and health insurance pays for the garbage health care which regulates principally h_m_o_
product and some limited p_p_o_ product as well sodium each season outs meant was with
the with regard to a blue shield march first increase that was in a fallen
about twenty seven thousand customers that are policyholders of blue shield plans that
are regulated by the department of managed health care announcement today is with regard to a blue shield rate
increase effective march first imposed on two hundred sixty thousand
customers better policyholders in blue shield
individual health insurance products that are regulated by the california
department of insurance i think it’s noteworthy that both
departments independently came to the same conclusion now with regard to the
rate increase uh… and reach that conclusion based on most if not all of the same underlying factors and so in both cases both regulators
have determined that blue shields rate increases in our case on twitter sixty thousand
customers in policies we regulate parmesh health care’s case on twenty
seven thousand customers and policies that they regulate in both cases we’ve concluded at the rate increases
unreasonable rifle like uh… etc i think that it’s very complicated for
consumers it’s very complicated for businesses it’s very complicated for uh… deregulated industries well and
it’s not terribly efficient but that’s not a decision that’s in my
hands that’s up to the legislature in the governor to decide uh… whether they want to change that
and right now there appears to be uh… little interest in changing the
status quo yeah on or wide the distinction is between essentially health insurance or p_p_o_ product verses managed care or h_m_o_ product by and large i’m so the garbage healthcare
principally has a forty over managed care or h_m_o_ product department surest
has authority over health insurance or proprietor provider organization at
what’s known as p_p_o_ product to make things more complicated though in some cases there’s some blue shield anthem blue
cross p_p_o_ products that you made c has authority over and so well the general rule of thumb is if you’re a managed care product you have a dispute with your
h_m_o_ or managed care provider you contact the inmate see if your health
insurance are p_p_o_ product to contact us but unfortunately the further confuse
things state law has allowed blue shield of blue cross to bring some of their
p_p_o_ product over the uh… individual markets small
employer uh… market uh… we’d regulate that as well as d macy uh… it’s just the nature of the
product in those two markets but principally defines the difference in
who has jurisdiction our current rave review process however
is limited to individual and small business rates neither agency
takes a look at large group for large employer rates of the questions on the phone then grey what thank you for your attention
uh… ros state you very much for
participating by phone okinawa really appreciate your sharing
your story with us um… and it’s uh… m absolutely uh… either yes and yes uh… actually though and uh… uh… or uh… picked up at all had unit it um… and more than i am show it uh… prostate can thank you very much they think both gracie in rises stories are
emblematic of the problems that consumers across california find
themselves contending wiht millions of consumers find themselves contending
with and that is the most they can afford is a high deductible player where they end up having to pay out-of-pocket
for most of their health care until they reach of five thousand or
twenty five hundred dollar deductible but even then they’re required to pay a very high
premium and a premium that keeps escalating in cost remember this eleven point seven percent increase
by blue shield physique twelve-month increase but in context last twenty four months their increase has been on the order of nineteen point
nine percent yourself so every year we’ve had these
double-digit increases ten twenty thirty forty fifty sometimes as high as a
hundred percent for individuals and families for the same things happened
the small business market to explains why small employers can’t afford this
any longer and yet they don’t have the ability to
shop too even though the habitability twenty
fourteen this trend we’re facing california’s
going to continue unabated we continue to see these rising rates and affordability of health insurance
for individuals and small businesses even with the affordable care and that’s why i think we need to change
the law so greg actually acted arching their arm extraordinary challenges looming ahead uh… the small businesses those with
fifty or fewer employees will not be required by law to provide health insurance under the affordable
care act they will have available to them it tax
credit of up to five thirty five percent to defray the cost of providing health
insurance they will be able to shop and cover
california new health benefits exchange where the hope is that cover california
will be able to negotiate a better price for them based on our experience with exchanges in other
states massachusetts adopted one of two thousand five when they adopted the affordable care act under governor
mitt romney that exchange did not bend the health insurance premium curve down for
individuals and small businesses so i remain worried that small businesses will still be
facing ever escalating increases in the price of health
insurance and they as many of them camps won’t be able to afford it and so there employees will be forced into the
individual market and will then be purchasing health
insurance either inside or outside of cover california and they’re too i think the rates are
going to go up so we have a real challenge on our hands
and one that needs to be addressed with that i think uh… that concludes
our are oppressed nobility really appreciate those who’ve turned out and
uh… fake stall those who are on the phone
appreciate your purchase spacious well and really what i think rising gracie
for sharing their personal stories uh… about what this really means that
individual personal level to consumers in california thanks again it

Leave a Reply

Your email address will not be published. Required fields are marked *