Believe it or n0t, but Blue Cross/Blue Shield of California, the "not-for-profit" that has attempted to raise it's rates as much as 59% in recent years - is announcing the unthinkable.
They're cutting their rates and even offering a rebate to their customers.
From the L.A. Times.
Health insurer Blue Shield of California, under fire for a series of recent rate hikes and the pay of its chief executive, plans to cut this year's premiums by 2.5% for many of its 3.3 million policyholders as part of a new initiative to hold down costs.
The nonprofit insurer, with about 10% of the California market, said the rate reduction would be applied to bills in October, resulting in $167 million in savings for nearly 2 million customers.
But the real question is - Why?
Was it because of regulatory pressure?
Consumer advocates said Blue Shield's announcement Tuesday may have been prompted by increased regulatory scrutiny. In March, the company canceled the last of three rate increases in seven months for individual policyholders amid pressure from customers and California's insurance commissioner.
Or is it part of some long term "Plan" by Blue Shield?
Blue Shield Chief Executive Bruce Bodaken, however, said the rate reduction had been in the works since August and was part of a broader effort to make health coverage more accessible.
"We really focused on this being a long-term strategic decision," Bodaken said in a conference call with reporters. "It's going to take a long time to get to universal coverage and to affordability. It is clear that even with health reform, we all need to do more."
In January of this year Blue Cross was trying to raise it's rates almost 60% only to be blocked.
He's been on the job less than a week and already California Insurance Commissioner Dave Jones has had to play hardball with Blue Shield, which just told nearly 200,000 California customers with individual health policies their rates are going up as much as 59 percent as of March 1.
"I have asked that the company postpone its rate increase 60 days in order to afford me the opportunity to fully review the proposed rate increase," said Jones. The move comes less than a year after Anthem Blue Cross tried but failed to get a 39-percent rate increase. Blue Shield says its rate hike averages about 33 percent, but this would be the company's third rate hike since October.
Under the initiative, most of the affected customers will see their October bills cut by nearly a third, which amounts to an annualized reduction of 2.5%. Individual policyholders will see an average savings of $80 that month, and a family of four will get an average $250 reduction. October premiums for business customers will drop about $110 to $130 per employee. Blue Shield also pledged to return money to customers in future years when its net income exceeds 2% of its revenue, which amounts to $180 million this year.
Several of Blue Crosses recent rate hikes have been questioned and blocked by the California Insurance Commissioner. So why are they suddenly going the opposite direction now?
Maybe it's because under the Affordable Care Act the Department of Health and Human Services has just announced new Rate Increase Guidelines which would could ban the types of double-digit increases that Blue Cross has made regularly.
“Health insurance companies have recently reported some of their highest profits in years and are holding record reserves,” Ms. Sebelius said. “Insurers are seeing lower medical costs as people put off care and treatment in a recovering economy, but many insurance companies continue to raise their rates. Often, these increases come without any explanation or justification.”
Federal health officials proposed the 10 percent threshold in December. The insurance industry criticized it as an arbitrary test that could brand a majority of rate increases as presumptively unreasonable. But the administration rejected the criticism and insisted on the 10 percent standard in the final rule, issued Thursday.
In addition under the ACA the Federal Government is providing $250 Million to the states to help them comb through the financials of these companies and discover if these rate hikes are financially justified or not.
Also as i've previously diaried the ACA sets an 85% Medical Loss Ratio Cap that is retro-active and requires companies like Blue Cross who've previously gouged their customers with ridiculous rate hikes - to pay them a rebate.
[The Ryan Plan] would repeal the 85% Medical Loss Ratio Limit for Insurers in the Exchange, and repeal the leverage State Insurance Regulators currently have to block insurers who are currently gouging their beneficiaries with costs above the 85% MLR level by denying them access to the exchange and requiring that they pay REBATES to their customers for any premium charges above the 85% MLR. This impacts us NOW, because if there aren't going to be Exchanges in 2014, there isn't any leverage to push for lower premiums with insurers today.
Lastly California State Law just might be changing soon.
Legislation passed by the California Assembly Health Committee Tuesday -- AB 52 (Feuer) -- would allow both the DMHC and the California Department of Insurance (CDI) to regulate health insurance premiums and prohibit insurers from imposing excessive rate hikes such as the Blue Cross increase taking effect on Sunday.
This bill is currently in the California Senate and if it passes will in all likelyhood will be signed by Governor Jerry Brown.
So is this really just something Blue Cross has decided to do out of the "Kindness of their blackened charred heart" or is it something they actually will soon be required to do under the Affordable Care Act and AB 52?
Will other health Insurers, hoping not to lose massive amounts of business to Blue Cross with it's shiny new lowered rates - or suffer the wrath of the ACA/Ab52 - follow suit?
Will they have a choice?