Blue Shield of California Cancels Planned Premium Increase

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Blue Shield of California has announced a decision to cancel a proposed rate increase that would have taken effect May 1, 2011. The company does not plan any further rate hikes until at least 2012. The increase would have been the third in recent months, according to the LA Times, with rates rising as much as 86.5% since October 2010.

The decision by Blue Shield to not increase rates for the rest of 2011 will save policyholders $35 million to $40 million this year, according to the plan.

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"The best way to fulfill our mission and make reform work is to keep costs down," Chief Executive Bruce Bodaken said. "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."

The decision is not only thought to be related to mounting pressure from both public consumers and political leaders, but also due to the fact that the company actually is paying out less for medical claims than it had anticipated. WellPoint spokeswoman Kristin Binns states that the lowered spending is likely due to people choosing to forgo doctor visits and elective procedures due to the economic times of today.

Insurance Commissioner Dave Jones hopes other insurance companies with pending rate increases will take notice of Blue Shield’s decision to cancel the rate increase. He notes Anthem Blue Cross, Aetna, and PacifiCare all plan to raise rates as well.

The May 1st premium increase would have averaged 6.5% and gone as high as 18% in some cases.

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