A First Rate Problem

Ahead of health care regulations going into effect in 2014, Blue Shield of California says it will have to jack up rates on individual health care plans by as much as 59% in 2011.

Another big California health insurer has stunned individual policyholders with huge rate increases — this time it's Blue Shield of California seeking cumulative hikes of as much as 59% for tens of thousands of customers March 1.

Blue Shield's action comes less than a year after Anthem Blue Cross tried and failed to raise rates as much as 39% for about 700,000 California customers.

San Francisco-based Blue Shield said the increases were the result of fast-rising healthcare costs and other expenses resulting from new healthcare laws.

"We raise rates only when absolutely necessary to pay the accelerating cost of medical care for our members," the nonprofit insurer told customers last month.

In all, Blue Shield said, 193,000 policyholders would see increases averaging 30% to 35%, the result of three separate rate hikes since October.

Nearly 1 in 4 of the affected customers will see cumulative increases of more than 50% over five months.

While most policyholders received separate notices for the successive rate hikes, others were given the news all at once because they had contracts guaranteeing their rate for a year, Blue Shield spokesman Tom Epstein said.

Michael Fraser, a Blue Shield policyholder from San Diego, learned recently that his monthly bill would climb 59%, to $431 from $271.

"When I tell people, their jaws drop and their eyes bug out," said Fraser, 53, a freelance advertising writer. "The amount is stunning."

It's a lot more than stunning, it's ridiculous.  Considering the recession slowed the rate of health care spending to the slowest increase in 50 years in 2009,  jacking up premiums is just an excuse for insurance companies to fleece customers while they try to recover from their own bad investments (Remember AIG?  It was far from the only insurance company that made bad investments in the last four years.)

This is insurance companies trying to lock in as high rates as possible before state insurance exchanges kick in and provide competition.

Pretty repugnant.