Blue Shield Plans for 59 Percent Health Premium Hike in California

California residents with health insurance could expect to see an increase in premiums of as much as 59 percent if they are insured with Blue Shield. The company announced last week it plans to jack up health insurance premium rates for customers. Pending review from the state insurance regulators, if the rates are approved, the increases will take effect on March 1.

Health Care Costs to Blame

Despite the fact that many health insurance companies have blamed their desire to increase rates on health care reform, Blue Shield of California, a member of the Blue Cross Blue Shield Association, announced the decision has “almost nothing to do with the federal health reform law.”

The company blames the need to increase rates on higher provider prices, increased utilization and the fact that healthier people are dropping their coverage in the bad economy. They say reform law will actually be able to lower costs and help more people regain insurance in the next few years, which could help to lower premium rates.

The increase in premiums is expected to impact 193,000 individual Blue Shield policyholders, but even with the increase, the company maintains it will lose tens of millions in individual healthcare business in 2010 and 2011.

Are You Subject to the Increase?

Members of Blue Shield may be surprised to learn that neither the Federal government nor the state insurance commissioner has the authority to reject excessive premium increases. While most lawmakers are highly opposed to the increase, the insurer insists that its new rates “meet the federal requirement.”

This means as long as the insurer follows the rules set forth within its proposal, it will be allowed to increase rates by 59 percent–and yes, plan members will be subject to the increase.

Unfortunately, the increase could result in many people losing coverage due to an inability to pay. Plus, since many members won’t fall into income brackets that can qualify them for assistance, they may not be able to find help elsewhere.

If you are a member of Blue Shield, the increase doesn’t mean you have to give up hope. You could always check this low income health insurance resource to see if you or your children qualify for help until health reform kicks in. Just keep in mind that with the Republicans in the House of Representatives looking to repeal the law, the assistance many are expecting may not take effect as planned.