It looks like they are seeking to raise most rates at 12%, but some as high as 20%.
At Blue Shield of California, based in San Francisco, reserves have jumped 77% since 2006 from $2.2 billion to $3.9 billion in September. That has outpaced the company's 19% growth in annual revenue since 2006.
Blue Shield said its reserves have nothing to do with rate increases, and that money has been put aside for the future benefit of its policyholders.
"Reserves are needed to ensure our members' claims can be paid no matter what," said Blue Shield spokeswoman Lindy Wagner. "We need them to protect against uncertainties like a pandemic or another crisis."
The company also expects higher costs from an influx of new customers under the federal healthcare law in 2014.
"It's a once-in-a-lifetime change in the healthcare market that will bring a lot of volatility, and we need higher reserves for that," Wagner said.
Even with these proposed rate increases, Blue Shield said, it expects to lose money in the individual insurance market in 2013.
The insurer said its medical costs for this segment of the business grew 10.6% and what it actually pays is rising 12.5% after adjusting for its portion after customer deductibles. The state's largest for-profit health insurer, Anthem Blue Cross, cited a similar jump in medical costs in seeking rate hikes as high as 25% for some individual policyholders, effective in February.
Looking at their reasoning (that there will be an influx of new customers to have to pay for and the reserves are necessary for that), do you see insurance rates ever coming back down as we have been told by those that promoted the ACA?
Answer by NannyB. at 11:54 AM on Dec. 13, 2012
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Answer by LostSoul88 at 9:53 AM on Dec. 13, 2012
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