Blue Shield Steps Back From Individual Policy Cancellations

Insurance Commissioner Dave Jones got an agreement from Blue Shield to allow its California policyholders to keep their individual and family health insurance policies through March 31, 2014. Previously, the company announced plans to cancel these individual and family policies on December 31.

Jones said, “There is nothing in the healthcare reform law that requires insurers to narrow their provider networks, but some insurers are doing so, which means consumers will want to confirm that their doctors and hospitals are in the network before selecting new coverage.”

Blue Shield agreed to send a new notice to consumers allowing them to stay in their individual market policies if they elect to do so and to provide the existing coverage through March 31, 2014, at the existing price with the existing medical provider network. If all of the policyholders elect to stay in their existing plans until March 31, the premium savings could be as high as $28.6 million. However, policyholders who are eligible for federal premium subsidies through Covered California will likely want to select their new policies by December 15, so they can start receiving premium assistance for January 1 coverage in their new plan.

Blue Shield CEO Bruce Bodaken said, “We have long acknowledged that the individual health insurance market is broken and we are pleased that the rules will change in 2014. But health reform will succeed only if we restrain the rising cost and utilization of medical services that is driving premium increases. We are dedicated to working collaboratively with providers and regulators to address that issue. A consistent, predictable and fair regulatory environment is another key component of a thriving competitive market that will drive affordability. Constantly changing what information is requested and imposing long delays confuses consumers and threatens the long-term viability of the market. The rules should be clear and regulators should act promptly on rate filings to enable individual insurance purchasers to know what they will pay for coverage and when they will pay it.”

Blue Shield lost $27 million on individual health insurance coverage in 2010 and even with the now withdrawn rate increase, the company expected additional losses on this business in 2011. As a result of today’s decision, Blue Shield individual policyholders will save $35-40 million this year.

In October 2010, the company filed for new individual market rates with the Department of Insurance, to be effective in March 2011. In January, Insurance Commissioner Dave Jones asked Blue Shield to delay the filing for 60 days and the company complied. At the same time, Blue Shield submitted the rates to an independent actuarial review by David Axene, who had completed rate reviews for the Department of Insurance in 2010 and discovered errors in several filings. Blue Shield also promised to pay refunds to its members if Axene’s review found that the rates were too high. On March 1, Axene released his report, which concluded that the rates were appropriate. With today’s action, however, that filing is withdrawn and the new rates will not take effect.

Under rates that are already in effect, some Blue Shield members will see their premiums change in 2011 if they move to a new region, add or subtract family members from their policy, or enter a new age band. Blue Shield changes rates based on age every five years, at the time of the member’s birthday.

Last Updated 09/23/2020

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