You are probably already in a bad place if you see this sign this close. You don't need to be worrying about the cost of the needed medical care as well.
Just days after shocking its clients with huge insurance rate increases, Blue Shield of California has now agreed to an independent review of its new rates. It promises refunds if the rates are found to be unfair.
Nearly 200,000 customer received notice of a rate increase last week. Blue Shield says the average was 15 percent, but admits because of variety of factors, some customers saw increases much higher than the average. Some customers saw an increase of nearly 60 percent.
Blue Shield CEO Bruce Bodaken said in a written statement Friday that he wants to be "absolutely certain" the new rates reflect actual medical care costs.
"To establish trust and confidence in our rate-setting process, we have taken the unprecedented step of agreeing to be bound by the conclusions of an independent third party. If this independent review finds that the rates are not sound, we will hold our members harmless by refunding the difference with interest," Bodaken said.
The audit may initially sound like good news to customers, but it could find that Blue Shield and in turn other health insurers are telling the truth about the cost of doing business. If so, the increases will likely stay.
The Wall Street Journal reported the audit could have implications for other managed health care companies.
All of the increases have caught the eye of California Insurance Commissioner Dave Jones.
Jones belittled the Blue Shield audit claiming it was actually a requirement under with state law SB 1163. He said he wants Blue Shield to delay the increase.
"I am disappointed that Blue Shield has not agreed to my reasonable request that they delay the implementation of their March 1, 2011 rate increase. I made that request in light of the fact that I had been sworn in only for 72 hours and wanted to make sure that I have the time needed to review their rate filing for compliance with a new state law (SB 1163) that went into effect January 1, 2011. SB 1163 requires the Insurance Commissioner to review the reasonableness of health insurance rate increases. It does not give the Insurance Commissioner the authority to reject unreasonable rate increases. Despite Blue Shield’s unwillingness to delay their rate increase, the Department of Insurance will conduct a full and complete review of their rate filing," Jones said.
Blue Cross says even with its hike, it expects to lose $10 to 20 million on its individual health plan business last year, and $20 to $30 million this year.
"Our premiums are rising because of the rapid increase in health care expenses for our members," said Bodaken.