Blue Shield Fires First Shot in Looming Power Struggle Over Rate Increases

Blue Shield has declared war in California. No sooner did Insurance Commissioner Dave Jones announce that he wants health insurers to pay 10 percent more of their revenues on health claims, than Blue Shield fires back with a rate increase for individual policyholders – almost 60 percent in some cases. See “Blue Shield of California Seeks Steep Rate Hikes,” http://www.latimes.com/health/healthcare/la-fi-insure-rates-20110106,0,6975599.story.

Just like other insurers that have attempted to raise rates recently, Blue Shield justified its move by citing rising healthcare costs; however, this insurer added a new complaint: expenses resulting from new healthcare laws.

But new healthcare laws, most particularly federal legislation affectionately known as “Obamacare,” were enacted largely to prevent the immoderate rate increases Blue Shield believes is justified.

Will this be the new trend in healthcare: Every time the government passes laws to protect consumers the healthcare industry raises rates to cover the “cost” of compliance? What other industry abuses its customers like the healthcare industry does, then gets away with it because people have few other choices.

It’s past time for the legislature to give the insurance commissioner the power to regulate health insurance rates in the same manner the office regulates auto insurance. If not, this could be a long, messy war.

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