Monday, February 14, 2011

Carriers Blink [UPDATED]

Last month, we reported that at least one carrier was seeking substantial rate hikes in The Golden State:

"California health insurer has stunned individual policyholders ... Blue Shield of California seeking cumulative hikes of as much as 59%."


Well, never fear, left-coasters:

"Three California insurers agreed to delay any rate increases for two months at the request of Insurance Commissioner Dave Jones."

Blue Cross is not to be confused with Blue Shield in this instance: the "Shield" has not agreed to the moratorium. On the other hand, Aetna and PacifiCare have both joined Blue Cross in agreeing to stave off their planned increases for two additional months. What's interesting is the basis for their action (or, rather, inaction):

"The pause will allow the department time to adequately review recent rate filings."

My question is: "Why?" We learned in the original post that the "insurance commissioner [lacks] legal authority to regulate insurance rates the same way he does automobile coverage." Recently, the law was amended to require "the insurance commissioner to review the reasonableness of health insurance rate increases but the commissioner is not authorized to reject unreasonable rate increases." So they gave him a knife, but purposely dulled the blade.

In other words, there's precious little that Mr Jones can do regardless of whether or not the insurers cooperate. So I ask again, why are they?

UPDATE: Thanks to Jessica in the comments, we learn that "Blue Shield of California has agreed to a request by California's insurance commissioner to delay a March 1 rate increase for 60 days."

Not to be a dullard, but I'd still like to know why.
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