By Darrell Smith
Published: Thursday, Mar. 17, 2011 – 12:00 am | Page 6B

Angry ratepayers found some relief Wednesday when Blue Shield of California dropped its plan to further raise insurance rates on hundreds of thousands of its customers in 2011.

Hikes that average 6.5 percent were set to go into effect in May and would have been the third since October levied by the San Francisco-based health insurer. State Insurance Commissioner Dave Jones said that would have meant as much as an 87 percent cumulative increase for some ratepayers.

Blue Shield “will not increase rates to any individual or family plan member for the remainder of the year,” said Bruce Bodaken, Blue Shield chairman and chief executive officer, in a statement Wednesday.

“This is a welcome development and a relief” to ratepayers,” Jones said at a Wednesday news conference.

Though the 200,000 Blue Shield customers who pay for their own insurance will have dodged rate increases for the remainder of 2011, that doesn’t shield them from the previous hikes, Jones said.

Blue Shield officials only hinted at the political and consumer pressure the company faced to drop the planned rate hikes, saying in a statement, “we are helping to make coverage more affordable … during tough economic times. It’s a financial risk for us, but a risk that’s worth taking.”

The not-for-profit insurer said it expects to lose upward of $30 million this year providing individual coverage and said rate increases are needed to defray rising health care costs.

But pressure from consumer groups, advocates and lawmakers has been building over rate hikes, said Austin Price, an associate at health care advocate California Public Interest Research Group. “This has been an issue over the past couple of years. Consumers are particularly sensitive to it in tough economic times,” Price said.

Jones referenced ratepayers’ rage in renewing his call for the power to reject rate hikes his office finds “excessive.”

Assembly Bill 52, legislation introduced by Assemblyman Mike Feuer, D-Los Angeles, would grant that authority.

“Californians are very upset about repeated rate hikes,” Jones said. “These rate hikes have a huge impact on people. Year after year of double-digit increases are unsustainable.”

Ratepayers’ anger grew in February when Blue Shield’s proposed rate increases sparked protests from nurses and consumer advocates at Blue Shield’s offices.

Hundreds of calls flooded Jones’ offices complaining about the planned hikes; and Jones called for a 60-day stay on the increases to give his office time to review the filing.

Jones shelved the review following Blue Shield’s latest decision.

Consumers’ ire was further stoked when Blue Shield released its own study in early March that concluded the rate hikes were justified.

Wednesday’s decision, CalPIRG’s Price said, “is a minor victory, but it won’t end the battle of consumers against rate increases.”

Indeed, Blue Shield and other health insurers in California “continue to have discretion to raise rates in the future,” Jones said.

But health insurers say regulators must take into account the rising costs of hospitals, doctors and medicine that are driving the hikes in health premium bills, as well as volatility in the individual plan market when examining rate increases, said Patrick Johnston, president of the California Association of Health Care Plans.

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