Big, Bad Blue Shield

by Sara Flocks, California Labor Federation

Blue Shield really has some nerve. The health insurance giant wants to jack up health insurance rates for Californians for the third time since October—adding up to a rate increase as high as 59 percent for some policyholders.  And when Insurance Commissioner Dave Jones asked the corporation to wait 60 days so that he can review their rate increase and to give some breathing room to the 194,000 Blue Shield customers -- many who are already struggling to afford health coverage -- Blue Shield REFUSED to comply. 

To make matters even worse, Blue Shield is using the whole fiasco as a way to polish their public image which has been marred by a series of outrageous rate hikes. CEO Bruce Bodaken had the nerve to announce that: “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."

Unprecedented? Maybe. But it’s not like Blue Shield is doing this out of the goodness of their hearts. A recently enacted California law requires that insurers have their rate increases certified by independent actuaries. The law passed after Anthem Blue Cross was forced to lower a proposed rate increase after errors were found in their rate filing. Even if Blue Shield’s rates are actuarially sound, what does that even mean? Just because a rate hike is actuarially sound does not mean that it’s a good idea, especially when insurance companies are let off the hook from figuring out how to control costs and just pass them on to consumers.

The Insurance Commissioner can ask Blue Shield and other insurers nicely to postpone or repeal their rate increase requests, but he does not have the power to reject them. Until  the Legislature passes a law regulating health insurance rates, we’re sure to see more rate hikes and more people unable to afford health insurance.  Now is the time to pass rate regulation and implement federal health care reform in a way that truly reforms the system and contains the costs that are hurting all of us.