Blue Shield of California has proposed rate hikes for 200,000 individual policy holders that could see some members' premiums jump as much as 59 percent on March 1.
Consumer advocacy groups and new California Insurance Commissioner Dave Brown criticized the proposal, calling it an example of the need for legislators to give the commissioner power to approve or reject proposed health insurance premium hikes.
"Many Californians will no doubt be surprised to learn that the insurance commissioner does not have the legal authority to reject excessive health insurance premium increases," Jones said. As a state assemblyman prior to his election as insurance commissioner, Jones said he had tried several times to pass legislation that would give the office that power.
"I have fought hard to give the insurance commissioner this authority for the last six years," he said. "I have authored strong legislation to give the insurance commissioner the authority to reject excessive premium increases, only to see it defeated in the legislature by conservative legislators. I will continue to fight to pass this legislation."
The advocacy group Consumer Watchdog, one of the insurance industry's most vocal critics, called the rate hike "Exhibit A" in the case to pass legislation allowing the insurance commissioner to regulate health insurance rates.
California Blue Cross officials defended the proposal by noting that the rate increases would cover a period of longer than one year. And in a break from other insurers that have used the new health reform law as partial justification for large rate increases, they were clear to note that reform did not play significantly in the need for the increase.
"These rates reflect trends that were building long before health reform," the company said in a prepared statement. "Our individual market medical costs are rising rapidly due to higher provider prices, increased utilization and the fact that healthier people are dropping coverage during a bad economy."
Jones, too, cited the economy as a major reason for his opposition to the rate increase.
"I find it stunning that Blue Shield would seek to impose such massive premium increases on policyholders during these troubling economic times," he said. "These premium increases will impose significant financial burdens on struggling families and, in some cases, will lead to the loss of healthcare coverage altogether."
The proposed increase could also trigger federal intervention. Last month the Department of Health and Human Services proposed new rules that would allow the agency to work directly with states to require insurers to provide information to justify "unreasonable" rate hikes.
"Year after year, insurance company profits soar, while Americans pay more for less healthcare coverage," HHS Secretary Kathleen Sebelius said in a December announcement of the proposed rules. "The Affordable Care Act is bringing unprecedented transparency and oversight to insurance premiums to help rein in the kind of excessive and unreasonable rate increases that have made insurance unaffordable for so many families."
The proposed rules state that "proposed rate increases of 10 percent or higher will be publicly disclosed and thoroughly reviewed to determine if the rate increase is unreasonable."
Currently, 26 states have the legal authority to reject proposed health insurance rate increases. The rules proposed by HHS are aimed at helping states that have the legal authority yet lack the resources to conduct thorough reviews, as well as providing oversight in states that don't have that regulatory power.
Even though he lacks the legal authority to reject the planned increase by California Blue Cross, Jones sent a letter to the company requesting it hold off the rate increase for 60 days beyond the planned March 1 effective date to allow the Insurance Commission to conduct a review.