The second shoe to drop. Just weeks after receiving information that Anthem Blue Cross was raising their rates effective Feb 1st, 2013 for individual family plans, we get a notification that Blue Shield is doing the same which we expected. We now have more detail on that increase and some guidance as to what is driving cost. It\’s the usual suspects but well worth re-iterating. So what are we looking at for the Blue Shield increase?

12% on average but up to 20% on some California clients

Blue Shield of California is forecasting an average of 12% for most of their health plans and 7% for many dental plans. Some clients will be see much higher increases up to 20% which is a big hit and in line with Cross\’ increase. These increases will apply to both grandfathered plans and the new plan options which were just brought to the California health market effective July 1st, 2012. That\’s probably the interesting item on this whole increase. They essentially revamped their entire individual health plan suite July 1st which by default included rate changes (let\’s translate that as increases) for these new plans. At calhealth.net, we partially expected them to last through 2013 with those new rates since all these plans go away Jan 1st, 2014 anyway but that was not the case and this highlights the pricing pressure the carriers are currently under. Let\’s look at why the rates are going up.

Medical utilization and Health Reform Mandates

That\’s a mouthful even for seasoned insurance professionals but this is why you are paying more (and have been for decades). Shield broke down their budget and it was interesting to say the least. Hospital accounted for the vast majority of spending with physician charges and RX coverage rounding out the bulk of the 85% of premium that must go directly to health care. Blue Shield has made a pledge of giving back any margin above 2% directly to their members which resulted in small rebates last year. This year will probably not see these rebates since Blue Shield is expected to actually lose money for individual and family health insurance. So what gives? Basically, people are using more expensive health care at a faster clip (that\’s the Utilization piece) and the Health Reform is mandating richer coverage (think maternity coverage on every plan, preventative, etc). You\’re paying the difference.

What about going forward?

If you make more than 400% of the federal poverty level, you can expect your rates to go up 30-50% Jan 1st 2014. If you make under the poverty level, you will likely see subsidies which offset the higher costs. This isn\’t great news but it\’s our current situation and the only thing we can do is try to find the best option for ourselves and our families (I personally have an individual/family plan myself…it\’s a crowded boat). In the meantime, we\’re trying to get through 2013 with the least out of pocket. You can run you instant quote here to make sure you are on the best plan. We come across many people all the time that are on more expensive plans than what\’s currently available on the market for one reason or another. If you move to Blue Cross, you will likely have a 6 month rate guarantee providing the effective date is before 2/1. Ideally, any change would occur Jan 1st since deductibles and the like all reset then. Keep in mind that we need to be in good health to change carriers or plans (outside of a true downgrade within the same carrier). We\’re happy to walk through your situation with you. Anthem\’s new Feb 1st 2013 rates are now available but Shield new March rates have not been released yet by the carrier. We hope to have those in our quoting engine by January.

Dennis Jarvis is a licensed California health insurance agent with extensive knowledge of the Individual California health market. Blue Shield of California 3-2013 Rate Increase

Dennis Jarvis is a licensed California health insurance agent with extensive knowledge of the Individual and Small Group California health insurance market. http://www.calhealth.net

Author Bio: Dennis Jarvis is a licensed California health insurance agent with extensive knowledge of the Individual California health market. Blue Shield of California 3-2013 Rate Increase

Category: Finances
Keywords: blue shield of California,California health insurance,rate increase,California rate increase