Blue Shield of California, a nonprofit health insurer, said on Wednesday that it would no longer seek a rate increase this year for individuals who buy coverage on their own rather than through an employer.
The insurer, a vocal proponent of the federal health care law, had come under sharp criticism for its request in January to raise premiums for some individuals by as much as 59 percent.
“Our not-for-profit mission is to provide Californians with access to quality health care at an affordable price,” said Bruce Bodaken, the chairman and chief executive of Blue Shield in a statement on Wednesday.
“As long-time advocates for universal health care coverage, we are also deeply committed to the success of health reform. The best way to fulfill our mission and make reform work is to keep costs down. By agreeing not to raise rates this year, we are helping to make coverage more affordable for our members during tough economic times. It’s a financial risk for us, but a risk that’s worth taking.”
Blue Shield’s rate request had followed a similar request by WellPoint’s Anthem Blue Cross subsidiary last year, which set off a firestorm of protest by federal and state regulators and consumer advocates. WellPoint became the poster child for why the new health care law was necessary.
But Blue Shield also came in for significant push back when it tried to increase rates. While the insurer, like WellPoint, blamed the rising cost of health care for the need to raise premiums, consumer advocates and others said the rate increases were too high.
At the request of state regulators, Blue Shield initially agreed to delay any increases and have its rates reviewed by an independent party. While that review justified the increase Blue Shield was seeking, according to the insurer, it eventually decided to withdraw the request.
Blue Shield says it lost $27 million selling coverage in the individual market last year and was expecting to lose money again in 2011, even after it raised rates. It estimates policyholders will now save between $35 million and $40 million by having their premiums stay the same.
You can read about Blue Shield’s initial rate request in an earlier blog item.
